How to invest in PSX?

Pakistan Stock Exchange also known as PSX is the popular stock exchange in Pakistan. It holds the title of best-performing Asian stock market several times.

As of 2021 data, PSX has 531 companies listed with 36 different sectors on the exchange. PSX has a market cap of Rs 7.68 trillion. 

Pakistan Stock Exchange has 13 indices listed right now. KSE 100 is one of the most popular indexes of PSX.

Initially, PSX was established in 1947 but over almost 7  decades it has seen many ups and downs.

The most fascinating thing about PSX is that it has only 300,000 individual investors and it still managed to be the best-performing Asian stock exchange in 2020.

How can foreigners invest in PSX?

Foreign persons and institutions as well as Overseas Pakistanis can invest in securities listed on Pakistan Stock Exchange. They can benefit from potential growth opportunities available through investing in the Stock Market. 

For non-resident Pakistanis, investing in PSX is especially an attractive opportunity as it will enable them to benefit from the competitive returns from the Pakistani Capital Market while being stakeholders in their homeland’s economy. 

There are two ways a foreign investor can invest on Pakistan Stock Exchange. 

First, you can invest through SCRA (Special Convertible Rupee Account). You can open an SCRA account by contacting directly with the Banks offering SCRA or you can open it through the brokerage firm. 

Second, another way of investing in PSX is to directly contact custodial service providers or international broker-dealers. 

For more information visit the Pakistan Stock Exchange website.

How can overseas Pakistanis invest in PSX?

In September 2020, the State Bank of Pakistan launched a great initiative for overseas Pakistanis.  

Roshan Digital Account also known as RDA. This initiative was launched with the collaboration of commercial banks in Pakistan.

This initiative’s major goal was to make banking and investment easy for overseas Pakistanis. 

In just 2 years, RDA has grown exponentially with more than $4 Billion in funds received from 175 countries. 

The best part about RDA is you can open your account online with basic documents. It also provides different account types ranging from shariah-compliant accounts to saving accounts.

For more information visit the State Bank of Pakistan website.

Overseas Pakistanis can invest in financial instruments being traded on Pakistan Stock Exchange by opening a Roshan Digital Account with an SBP-designated commercial bank. 

How to invest in PSX as a Pakistan resident?

In Pakistan, many people are unaware of the opportunities in the Pakistan stock market. The Pakistan stock market is one of the best investment choices one can make.

Today, Investing in PSX is very easy. You don’t have to sign 10 or 20 pages of documents to just open your broker account. 

Apps like Ktrade and Finpocket have changed the game. You can start investing from as low as Rs.5000. You don’t need to have a Million Rupes to get started. 

If you want to invest in shariah-compliant companies then Pakistan Stock Exchange has a separate index of KMI All-Share Index and the KMI 30 Index in which all shariah-compliant companies are listed.

Students, housewives, and business persons can easily invest their money in the stock market. I have written a whole article for students “How to start investing in your 20’s?”. This article will further explain to you the importance of investing early.

Why people don’t invest in PSX?

PSX has a great number of companies that have outperformed in the past. There are several reasons why people are unaware of investment opportunities in the Pakistan stock market. 

Reasons people don’t invest in PSX

• Many people in Pakistan think the stock market is not shariah and it is just a place to gamble your money.

• In Pakistan, many people are financially illiterate. Almost 50% of the population has no access to financial services.

• Pakistan has the lowest saving rate. As of 2020, gross saving was 16.91%.

• People also fear losing money in the stock market due to economic unsustainability.

Pakistan Stock Exchange has embarked on a Financial Literacy Initiative to educate potential investors about investment basics, financial planning, and stock market investments.

The Initiative seeks to educate the general public about defining their investment objectives, what to expect from the stock market, beginning investing in the stock market, securing their brokerage account, dos & don’ts of investing in the stock market, and considerations while investing.

The Initiative also seeks to educate the general public about the operational, strategic, and regulatory developments taking place at PSX. 

Visit Guide to Investors for more information.

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

Paul Samuelson

What strategy to use for investing in PSX?

Today, there are several investment opportunities in the stock exchange, which anyone can use immediately and become rich. 

It is entirely up to you what type of strategy you want o use for investment. You can start by reading analytics reports and balance sheets of companies to determine which company is better for you.

It is a place where people go to make money, both over the long term and quickly. To make money in the stock exchange market: many ways are available, using traditional techniques and more innovative methods.

The traditional way in PSX is to hold income stocks. Those stock companies earn high revenues frequently and pay dividends to stockholders every quarter. 

Stocks that pay higher-income stocks or dividends may often make money for their owners. However, investors may have to gather large amounts of money from such stock shares to receive outstanding dividend payments. 

Conclusion

Pakistan’s Stock Market has great potential for foreign, institutional, and local investors. PSX has performed well in the past. Every market has its ups and downs as PSX has its own.

The opportunity is still there and many companies listed on PSX have a very good reputation worldwide and are doing very exciting work and are ever-growing companies. 

If you are an intelligent investor you will always see the potential and opportunity in the market no matter how hard the economic situation is.

Note: This is not financial advice this article is only for information purposes.