Investing in Pakistan Stock Market for Beginners

Shahid H. Raja
8 min readNov 27, 2019



After remaining depressed for a year or so, Pakistan’s Stock Market, always considered one of the best-performing in the world, is again picking up. It came down from the high 50,000s to the low 30,000s and presently again moving towards 50,000s. It will soon regain its lost ground in the short to medium period and then move upwards in the long period. It is therefore right time to buy Pakistani stocks if you are interested in highly profitable returns in the medium to long term.

(However, if you are interested in quick and safe returns in a very short period, then Pakistan government treasury bills are now offering one of the highest returns in the world, attracting huge foreign inflows)

Before you start investing in the stock market, please read a few good books on this issue and keep on updating your knowledge by reading the financial pages of the newspapers.

One good book I can recommend is “The Intelligent Investor”. Warren Buffett’s pick as the greatest investment book of all time, The Intelligent Investor by Benjamin Graham was first published in 1949 and is still rated the best in this genre.

A few of his pieces of advice are

  1. Your main goal should be to not lose money; so go for ‘investing’ and avoid ‘speculating,’. Buy some good stocks and stick with them instead of day trading.
  2. Buy the stock whose Price/Earnings Ratio should be less than 15. ( P/E ratio or the PER is the ratio of a company’s stock price to the company’s earnings per share.)
  3. Don’t invest in companies that have had negative earnings-per-share in the last three years.
  4. Similarly, its Price/Book Value Ratio should be less than or equal to 22.5. (P/B ratio, is a financial ratio used to compare a company’s current market price to its book value. This ratio also gives some idea of whether an investor is paying too much for what would be left if the company went bankrupt immediately)
  5. Don’t buy a share simply because its share is selling cheap; look for its EPS growth (annual rate of growth of earnings from investments). Ideally, it should be more than 30% (cumulative) over the prior 10 years. This is a good indicator of a stable and sound business model.
  6. Look for a current ratio (current assets / current liabilities) greater than 2. It is a signal that the company is financially secure.
  7. Always prefer companies with dividends and consistent dividend growth.
  8. Market crashes should be thought of as exciting and delightful fire sales on the best stocks. By contrast, be terrified when the market has gone up far, and fast, and resist the urge to start buying more stock when the market is up. In other words, he does not advocate investing or divesting simply because the market goes down or up, one always looks at individual companies.

A lot of financial jargon? Do not worry. Everything is available online. This is essential if you want to enter this field. And you will get used to these terms within a few days.

How to buy stocks in Pakistan?

First, select a brokerage firm for opening an account. My suggestion would be to select any of the following brokerage firms attached to the Central Depository Company(CDC), the sole entity handling the electronic (paperless) settlement of transactions carried out at the Pakistan Stock Exchange (PSX)

  1. Alfalah CLSA Securities (Pvt) Limited

2. Arif Habib Limited

3. BMA Capital Management Limited

4. Foundation Securities (Pvt.) Limited

5. Khadim Ali Shah Bukhari Securities Limited

6. JS Global Capital Limited

7. Market 786 (Pvt.) Limited

8. Muhammad Munir Muhammad Ahmed Khanani Securities (Pvt.) Limited

9. Topline Securities Limited

Opening an account is quite easy, almost hassle-free as everything is now online. The firm’s customer service will guide you and send you the software which is very easy to learn, hardly a few hours of practice.

Secondly, choose the sectors you want to invest in; presently, in Pakistan, cement, banking, oil/gas and foreign MNCs are blue chips.

Thirdly, select the firms in these sectors you think are best. Buy shares of foreign MNCs, cement companies, banks and oil and gas firms particularly OGDC/PPL Purchase their shares through any reputable stockbroker and then wait.

Fourthly, do not indulge in day trading. It thrills but kills the novices. Read about them, talk to the brokerage firm and no harm if you send an email to the company you choose and ask them for the above five pieces of information.

Fifthly, buy the shares and relax; no need to do day trading as it is risky when you start buying shares. learn the tricks of the trade for at least three months and then start day trading if it thrills you

Lastly, keep on buying additional shares every month by saving a fixed amount every month-how small it may be. One less Bareeze/Sana Safinaz suit per month means at least 100 more shares of a good firm

Investment Procedure for Overseas Pakistanis

One of the best initiatives of the present government is the start of the Roshan Digital Account (RDA) for Non-Resident Pakistanis (NRPs). State Bank of Pakistan in collaboration with eight Scheduled banks operating in Pakistan has launched this scheme to provide innovative banking solutions for millions of Non-Resident Pakistanis (NRPs).

Besides normal banking services, these accounts can be used to transfer remittances aswell as make investments in government bonds, property or stock exchange.

What makes RDA most attractive is its availability in both currencies namely Pak rupees or US$/British £/EURO etc. The account holder can choose either a foreign currency or rupee-denominated account, or both. For NRPs, these accounts would be interoperable and enable real-time online conversion from foreign currency to Pakistani Rupees and vice versa.

In addition to the above, some of the salient features of these accounts are

  1. No minimum balance requirement
  2. Customers can open a Foreign Currency Value Account (USD) or an NRP Rupee Value Account as defined in Chapters 6 & Chapter 8 of the Foreign Exchange Manual.
  3. Both these accounts are fully repatriable.
  4. The account can be fed by Foreign Inward Remittances originating from the account holder himself/herself through formal channels (only banks)
  5. Monthly account statements are sent to the registered email address
  6. Accounts are to be opened by Non-Resident Pakistanis only.
  7. Account to be operated singly
  8. Accounts are funded through foreign remittance only.
  9. Local credits are allowed to the extent of proceeds received from permissible investments made from the account
  10. Account to be opened in 48 hours if everything is in order.
  11. Mobile Banking App and Debit Card Available

How to open a Roshan Digital Account(RDA)

This account can easily be opened through an online portal / mobile application by providing minimum documents in just 48 hours. Most importantly, there is no need to visit a bank branch or the consulate/embassy of Pakistan.

Fill Account Opening Form

Currently, there are eight banks with which you can open an account. Select anyone that you feel is more convenient. Go to the selected bank’s website for filling account opening form digitally.

  1. Bank Alfalah

2. Faysal Bank

3. Habib Bank Ltd

4. MCB Ltd

5. Meezan Bank Ltd

6. Samba Bank

7. Standard Chartered Bank Ltd

8. United Bank Ltd

Kindly note; If you are interested to buy stocks and shares through your RDA, then select one of the following banks because all eight do not provide these services

  1. Bank Alfalah

2. Habib Bank Ltd

3. Meezan Bank Ltd

4. United Bank Ltd

Choose Digital Account Type

Before applying online, kindly read the selected banks’ eligibility criteria and account opening procedure by clicking the “For More Details” links given on their respective websites. Most of the banks will initiate their online application with Email registration/verification through OTP. Or some banks may direct you to Choose the type of Digital Account — a Foreign Currency Account or a Pak Rupee Account.

Upload Documents

Once you have initiated your online account opening application, you will be required to upload scanned copies of the following documents to open an account:


2. Passport (Pakistani and/or foreign country).

3. Proof of non-resident status.

4. Proof of profession and source of income/ funds.

5. For salaried individuals: job certificates/ salary slips.

6. For business persons: tax return/ rent agreement/ any other proof of income.

7. Some banks may ask for other documents including Utility Bills/Tenancy Agreements/Any government-issued document other than the identity document for address verification

Add Picture

You will be asked for a digital photo that would be taken at the time of filling out the form and uploaded live.

Receive Confirmation

Selected banks representative may contact you via video call or any other medium for verification. You will get confirmation of the account opening within 48 hours.

Transfer Funds

After the account opening, you can transfer funds into the account through banking channels from the country of your residence.

Please note:

Banks may not be able to offer Roshan Digital Account or investment in Naya Pakistan Certificates for residents of some countries due to their legal requirements. As a rough guide, you can say all EU countries, the UK, USA, Canada, Japan, and South Korea are the countries where you can open an RDA but can not buy the Naya Pakistan certificates. However, do check with the bank about the latest position in this respect.

Procedure for Opening a Stocks Trading Account

After the opening of the RDA, the Bank will provide you with the option of investing in the following asset classes:

a) Naya Pakistan Certificates (NPCs)-where permitted

b) Stocks (equities, debt, others)

When you select Stocks as the mode of investment, the concerned Bank will ask you to give consent to allow the bank to share your information and scanned copies of documents with the Central Depository Company(CDC). It is the sole entity handling the electronic (paperless) settlement of transactions carried out at the Pakistan Stock Exchange (PSX).

Bank will also share your details with the brokerage firm you select as well as with the National Clearing Company of Pakistan Limited (NCCPL). Further, the bank will also obtain an agreement on the terms & conditions of Custody and Trading Accounts.

Subsequently, the bank will ask you to select a brokerage house for trading purposes. Select any of the following brokerage firms connected with the CDC

  1. AKD Securities Limited

2. Alfalah CLSA Securities (Pvt) Limited

3. Arif Habib Limited

4. BMA Capital Management Limited

5. Foundation Securities (Pvt.) Limited

6. Khadim Ali Shah Bukhari Securities Limited

7. JS Global Capital Limited

8. Market 786 (Pvt.) Limited

9. Muhammad Munir Muhammad Ahmed Khanani Securities (Pvt.) Limited

10. Topline Securities Limited

Once the process is complete, the commercial Bank will forward your details along with scanned copies of documents and IBAN to the CDC electronically.

After receiving the details from the bank, CDC will send an email intimation to you, and will also forward the details and digital form of documents to the respective brokerage house as well as NCCPL for allocating your Unique Identification Number (UIN).

The brokerage firm will perform its due diligence and confirm the opening of the trading account to you and CDC within one working day, along with the particular online trading portal.

Now you can trade in the Pakistani stock market using the brokerage firm’s online portal.

Clearing, Settlement and Custody

You have the following two options for settlement and custodianship of the stocks and shares you have purchased

  1. Direct Bank Method: Under the Direct Bank Model, the respective Bank will be responsible for all the matters related to the Clearing, Settlement and Custody of your stocks and shares.

2. CDC Direct Settlement Service: Under CDC DSS Model, the CDC will also open an IAS account and share the details of CDC access with you.

Repatriation of Funds

One of the most important features of RDA is that you can easily repatriate the funds back to the country of your stay. You can lodge a request to transfer the funds back to RDA at any time through the web portal or email. Subsequently, once the funds are received in RDA, you can request to respective Bank for repatriation of funds overseas.