Chris Wood thinks Karachi-listed stocks can be a good trading bet; here's why

Karachi Stock Exchange (KSE 100)-listed stocks can be a good trading bet, according to Christopher Wood, global head of equity strategy at Jefferies, especially around the IMF bailout periods.

Puneet Wadhwa New Delhi

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Karachi Stock Exchange (KSE 100)-listed stocks can be a good trading bet, according to Christopher Wood, global head of equity strategy at Jefferies, especially around the International Monetary Fund (IMF) bailout periods.

Since the last IMF program in September 2024, the MSCI Pakistan Index is up 84 per cent in US dollar terms, Wood wrote in his weekly note to investors, GREED & fear, a period in which it has outperformed MSCI India by 124 per cent in US dollar terms.

"Still, to keep matters in perspective, it is only fair to point out that since the start of this century India has outperformed Pakistan by 653 per cent in US dollar terms," Wood said.

Meanwhile, Pakistan, earlier this week, invited the US and Iran for talks in Islamabad on Friday in the backdrop of the recent conflict in West Asia. Prime Minister Shehbaz Sharif, according to reports, in a social media post announced that the US and Iran, along with their allies, have agreed to an immediate ceasefire amid the West Asia conflict. READ ABOUT IT HERE

Pakistan's stock markets, too, have been taking note of the developments with the Karachi Stock Exchange (KSE 100) rising nearly 13 per cent thus far in fiscal 2026-27 (FY27) as compared with nearly 6.4 per cent up move in the BSE Sensex during this period, data shows. In the last one year, KSE 100 index has surged close to 44 per cent and outrun the BSE Sensex that moved up 8 per cent during this period.

"The Pakistan-brokered ceasefire should be viewed for now as another version of TACO, the belief in which explains in large part why financial markets have not sold off more in the face of the dramatic Middle East news flow of the past six weeks," Wood wrote.

The two-week ceasefire is good news for an energy vulnerable India, Wood believes, even though it must be galling, from a New Delhi perspective, to see Pakistan achieve such a prominent profile on the world stage.

"While Pakistan has been a bit of a macro-economic disaster for most of its existence since its independence in 1947, characterised by a lack of exports, recurring current account crises and numerous IMF programs, it has genuine geopolitical significance because of its nuclear status and its large military," Wood added.

Valuation & risks

That said, Wood remains 'marginally overweight' on Indian stocks, and believes that any renewed conflict in Iran along with a sudden cessation in domestic mutual fund inflows remain key risks for the Indian stock markets in the months ahead.

The MSCI India has underperformed both MSCI Emerging Markets and MSCI AC Asia Pacific ex-Japan indices by only 1.9 per cent in US dollar terms since the beginning of March, Wood said, after underperforming by 16.2 per cent and 16 per cent, respectively in the first two months of calendar year 2026 (CY26). ALSO READ: Markets at crossroads: Policy framework must for sustained up move

The Nifty one-year forward price-earnings (PE) is now 18.3x after reaching 17x at the end of March, which is close to the pre-Covid average of 16.8x seen between 2015 and 2020.

“It is further the case that the de-rating in recent months, driven by aggressive foreign selling rather than any particularly negative news flow, means that India’s traditional overvaluation has reduced significantly,” Wood said in his weekly note.

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First Published: Apr 10 2026 | 11:18 AM IST