The Pakistan Stock Exchange (PSX) experienced a significant increase in initial public offerings (IPOs) in 2024. The bourse saw seven IPOs this year, including two on the GEM Board. This marked a sharp rise from just one IPO in the previous year.
The total amount raised from investors through the seven offerings in 2024 was Rs 8.4 billion. This is the highest level since 2021, when there were eight IPOs that collectively raised Rs 19.9 billion. The growth in IPO activity signals strong investor interest in the market.
Macroeconomic Stability Drives IPO Growth
Experts attribute the increase in IPOs to several factors, including macroeconomic stability under the International Monetary Fund (IMF) program. The program helped stabilize the economy, which, in turn, boosted market sentiment.
Positive Market Conditions
In addition to macroeconomic stability, other factors contributed to the growth in IPOs. These include high liquidity, falling interest rates, and political stability. Together, these elements created an environment that encouraged equity investment.
Outlook for 2025
Looking ahead to 2025, experts expect more IPOs to hit the market. Market valuations have increased significantly, making it an attractive time for companies to offer shares. The abundance of liquidity, fueled by a shift from fixed income investments, is also expected to drive further IPO activity.
Increased Market Valuations
Market valuations in Pakistan have seen a noticeable uptick, which is likely to encourage more companies to enter the public market. Higher valuations make IPOs more appealing for both companies and investors, as they present opportunities for growth.
One of the key factors pushing IPOs in 2025 is the abundance of liquidity in the market. Investors are moving away from fixed-income investments and are looking for equity-based opportunities. This shift is expected to provide ample capital for new companies coming to market.
Positive Market Sentiment Continues
The positive sentiment in the market is expected to continue into 2025. The combination of stable macroeconomic conditions and political stability will likely keep investors optimistic. As more companies tap into the public equity market, the PSX could see continued growth in IPO activity.
Investment Opportunities for Investors
For investors, the increase in IPOs offers new opportunities for growth. With higher liquidity and a positive economic outlook, many are looking to diversify their portfolios by investing in newly listed companies.
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