Karachi: Pakistan's economy exhibited signs of stabilization in the first quarter of 2025, marked by a significant reduction in inflation and a record-setting performance by the Karachi Stock Exchange (KSE). According to the un-audited financial statements presented by the Board of Directors of JS Global Capital Limited for the JS Global Banking Sector Exchange Traded Fund, consumer price index (CPI) inflation dropped to under 1% in March 2025, averaging 1.5% for the quarter. This contrasts sharply with the 24% inflation rate experienced in the same period the previous year, largely due to reduced food and energy prices.
The current account balance showed a deficit of $12 million in February 2025, contributing to an eight-month fiscal year surplus of $691 billion. This surplus was supported by a 33% year-on-year growth in remittances sent by overseas Pakistanis. Meanwhile, the State Bank of Pakistan halted its monetary easing cycle after a 100 basis point cut in the policy rate in January 2025, bringing it down to 12% from 22% in June 2024.
Despite missing its revenue collection target by Rs725 billion, bringing the total to Rs8.44 trillion for the first nine months of the fiscal year, Pakistan remains on track to meet the International Monetary Fund's (IMF) tax-to-GDP target of 10.6% for FY25. Structural reforms and privatization efforts, including plans for state-owned enterprises and gas tariff adjustments, are in progress as part of commitments made to the IMF. An agreement with the IMF also includes a new 28-month Resilience and Sustainability Facility arrangement, providing total access of $2.3 billion.
According to information available from the Pakistan Stock Exchange (PSX), the KSE-100 Index reached an all-time high of 118,000 points in March 2025, achieving a 4% monthly return and a cumulative quarterly gain of 2% over December 2024 levels. The positive momentum was driven by favorable feedback from the IMF on Pakistan's progress in addressing circular debt issues, particularly boosting energy stocks.
The average daily trade volume increased by 31% year-on-year, although foreign investors recorded a net outflow of $55 million during the quarter. Despite weak earnings reports, corporate and bank dividend payouts remained stable, with the Cement and Auto sectors surpassing earnings expectations.
The Cement sector emerged as the top performer on the PSX, delivering a 17% quarterly return, followed by the Chemical sector with a 12% return. These results were buoyed by anticipated demand recovery, rising cement prices, and expected construction sector relief in the forthcoming budget.
Globally, equity markets and oil prices experienced volatility due to new tariff impositions by the recently elected U.S. President on China, Canada, and Mexico.
The JS Global Banking Sector Exchange Traded Fund reported a net asset value per unit of Rs. 20.37 as of March 31, 2025, translating to a 2.87% return, slightly below its benchmark return of 3.73%. The Fund's net assets stood at Rs. 97.6 million, with a total expense ratio, including government levies, of 0.08%.