Karachi, May 2, 2025 – In a trend aimed at boosting market participation and improving liquidity, six companies listed on the Pakistan Stock Exchange (PSX) announced stock splits during the current calendar year. However, only two of these companies have seen their stock prices register net positive gains since their respective announcements, according to market insights shared by Arif Habib Limited.
The companies that initiated stock splits this year include Arif Habib Corporation Limited (PSX: AHCL) with a 10-for-1 split, Lucky Cement (PSX: LUCK) with a 5-for-1 split, Intermarket Securities Limited (PSX: IMS) with a 10-for-1 split, Systems Limited (PSX: SYS) with a 5-for-1 split, United Bank Limited (PSX: UBL) with a 2-for-1 split, and Thatta Cement Company Limited (PSX: THCCL) with a 5-for-1 split. Despite the growing popularity of stock splits as a strategic tool to enhance affordability and retail investor access, only AHCL and LUCK have experienced substantial upward momentum in their stock valuations.
According to performance data compiled since the dates of the stock split announcements, Arif Habib Corporation Limited led the group with a robust 36.6% gain, while Lucky Cement posted a 15.0% increase. These companies are the only ones among the six that managed to generate net positive returns post-split, signaling investor confidence in their fundamentals and growth outlook.
Stock splits, by design, do not alter the intrinsic value of a company but are often used as a psychological lever to make shares appear more affordable and improve trading volume. In many global markets, including Pakistan, such actions are intended to attract a broader base of investors, particularly retail participants who may find lower per-share prices more appealing.
Despite these intentions, the performance of the remaining four companies—IMS, SYS, UBL, and THCCL—has failed to reflect any significant post-split momentum. Analysts believe that broader market conditions, investor sentiment, and company-specific fundamentals play a far more critical role in post-split performance than the split itself.
Systems Limited, for instance, is a prominent tech company with a strong financial history, but has faced investor uncertainty due to global tech sector corrections and local valuation concerns. Similarly, UBL and Thatta Cement are navigating sector-specific pressures that may have overshadowed the temporary benefits of stock splits.
The current scenario underscores an important message for investors and corporate decision-makers alike: stock splits are not a guaranteed catalyst for upward price movement. Their success is often contingent upon a combination of market timing, investor perception, and the overall economic environment.
Market experts suggest that while stock splits may enhance short-term trading activity, sustainable growth and returns rely heavily on consistent financial performance and a sound strategic roadmap.
As investor education and market sophistication grow in Pakistan, the impact of corporate actions like stock splits will likely be analyzed more critically, emphasizing the importance of fundamentals over cosmetic changes.