{"id":450,"date":"2025-04-19T17:58:57","date_gmt":"2025-04-19T17:58:57","guid":{"rendered":"https:\/\/remote-support.space\/wordpress\/?p=450"},"modified":"2025-04-19T17:58:57","modified_gmt":"2025-04-19T17:58:57","slug":"average-stocks-roi-in-adjusted-terms-psx-kse-vs-sp","status":"publish","type":"post","link":"https:\/\/remote-support.space\/wordpress\/2025\/04\/19\/average-stocks-roi-in-adjusted-terms-psx-kse-vs-sp\/","title":{"rendered":"Average stocks ROI in adjusted terms. PSX\/KSE vs S&P"},"content":{"rendered":"\n

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Comparing the long-term historical performance of the Pakistan Stock Exchange (PSX\/KSE) and the U.S. S&P 500 Index, including dividends and adjusted for inflation. Looking at annualized returns and total growth in USD terms, incorporating dividend reinvestment and currency\/inflation effects.<\/p>\n\n\n\n

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Overview of Indices and Period of Comparison<\/h2>\n\n\n\n

The Pakistan Stock Exchange\u2019s KSE-100 Index was created in 1991 with a base value of 1,000 points (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>). It is a total return index<\/strong>, meaning it is adjusted for dividends (as well as corporate actions like bonuses\/rights) (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>). We compare the KSE-100\u2019s long-term performance since inception (1991) to that of the U.S. S&P 500 index over the same period, including reinvested dividends<\/em> for both. All figures are converted to U.S. dollar terms, and we adjust for inflation (presenting values in constant USD). This allows an apples-to-apples comparison of total return<\/strong> and real (inflation-adjusted) growth<\/strong> for an investor in each market. (Note: Because KSE-100 data begins in 1991, our comparison starts there. The S&P 500\u2019s longer history is truncated to the same period.)<\/em><\/p>\n\n\n\n

Nominal Total Returns (Including Dividends)<\/h2>\n\n\n\n

Over the full period, the KSE-100 delivered higher local-currency<\/strong> returns, but the U.S. market far outpaced it in USD terms<\/strong> once currency depreciation and inflation are accounted for. In Pakistani rupee terms, the KSE-100 produced roughly 14\u201315% average annual returns<\/strong> since 1991 (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>). This means 1,000 rupees invested in 1991 grew to about 47,000 rupees by 2021 (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>), a ~47\u00d7 multiplication. By early 2025, the index reached ~117,000 points (total return) \u2013 about 120\u00d7<\/strong> its 1991 level in rupees. In contrast, the S&P 500\u2019s USD<\/strong> total return averaged about 10\u201311% annually<\/strong> over a similar 30+ year span (S&P 500 Returns since 1991<\/a>) (Benefit of Advice During Stock Market Volatility | New York Life<\/a>). For example, $100 invested in the S&P 500 at the start of 1991 grew to approximately $3,205 (nominal) by the end of 2025 (S&P 500 Returns since 1991<\/a>). This is a 32\u00d7<\/strong> increase in dollar terms, reflecting the power of reinvested dividends and U.S. market growth. Meanwhile, the same $100 invested in KSE-100, when converted to USD, grew to only around $1,000<\/strong>\u2013$1,030<\/strong> by 2025 (nominal USD). In other words, KSE-100 turned ~$1,000 into about $7,273 over 30 years (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>)<\/strong>, whereas the S&P 500 turned $1,000 into roughly $32,000 over ~34 years (1991\u20132025). The vast difference is mainly due to Pakistan\u2019s rupee depreciation against the dollar over time. The Pakistani rupee fell from ~\u20a824 per USD in 1991 to around \u20a8280 per USD by 2025, eroding much of KSE\u2019s local gains when measured in USD (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>).<\/p>\n\n\n\n

Total Growth:<\/strong> In nominal terms including dividends, the KSE-100\u2019s USD total return<\/strong> was on the order of +900%<\/strong> (about a 10-fold increase from 1991 to 2025), whereas the S&P 500\u2019s total return<\/strong> was over 3,100%<\/strong> (over a 32-fold increase) in the same timeframe (S&P 500 Returns since 1991<\/a>). This corresponds to annualized nominal returns<\/strong> of roughly ~6\u20137%\/yr<\/strong> for KSE-100 in USD, versus ~10\u201311%\/yr<\/strong> for the S&P 500 in USD. The table below summarizes key metrics:<\/p>\n\n\n\n

Index (1991\u20132025)<\/th>Nominal CAGR (Local)<\/th>Nominal CAGR (USD)<\/th>Total Growth (USD)<\/th><\/tr><\/thead>
KSE-100 (Pakistan)<\/strong><\/td>~14%\/yr in PKR (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>)<\/td>~6\u20137%\/yr in USD (approx.)<\/td>~$1,000 \u2192 ~$7,273 (1991\u20132021) (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>)<\/td><\/tr>
S&P 500 (USA)<\/strong><\/td>~10.6%\/yr in USD (S&P 500 Returns since 1991<\/a>)<\/td>~10.6%\/yr in USD<\/td>$100 \u2192 ~$3,205 (1991\u20132025) (S&P 500 Returns since 1991<\/a>) (32\u00d7 growth)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

(CAGR = compound annual growth rate. The KSE-100 USD CAGR is an approximation from source data; S&P CAGR is from official data (S&P 500 Returns since 1991<\/a>).)<\/em><\/p>\n\n\n\n

Inflation-Adjusted (Real) USD Performance<\/h2>\n\n\n\n

After adjusting for inflation, the gap in real purchasing power growth<\/strong> is also evident. U.S. inflation was moderate over this period (the dollar\u2019s CPI value roughly 2.3\u00d7<\/strong> higher in 2025 than in 1991 (S&P 500 Returns since 1991<\/a>)). The S&P 500\u2019s real return<\/strong> was about 7.9% per year<\/strong> (S&P 500 Returns since 1991<\/a>), whereas the KSE-100\u2019s real USD return<\/strong> was only on the order of 4\u20135% per year<\/strong>. In cumulative terms, $100 in 1991 would yield roughly $1,265 of inflation-adjusted profit<\/strong> in the S&P 500 by 2025 (i.e. the $100 grew to $1,365 in 1991 dollars) (S&P 500 Returns since 1991<\/a>). By contrast, $100 in the KSE-100 grew to only about $436 in 1991-dollar terms (\u2248 $1,000 in 2025 dollars, as noted above).<\/p>\n\n\n\n

(image<\/a>) Inflation-adjusted total return of $100 invested in 1991 (in constant 2025 USD). The S&P 500 (blue) vastly outgained the KSE-100 (green) over the long run.<\/em><\/p>\n\n\n\n

As the chart shows, the KSE-100 had periods of strong performance \u2013 for example, it was one of the world\u2019s top-performing markets in the early 2000s and mid-2010s \u2013 occasionally narrowing the gap with the S&P. However, the long-run trend favored the S&P 500<\/strong>, especially after 2015. The U.S. market\u2019s robust gains, combined with a stable currency and lower inflation, resulted in far greater growth of real wealth. By the end of 2024, an inflation-adjusted USD investment in the S&P 500 was worth nearly 3 times<\/strong> the same investment in KSE-100.<\/p>\n\n\n\n

Summary and Data Considerations<\/h2>\n\n\n\n

Annualized Returns:<\/strong> Over the full period (1991\u20132025), the S&P 500 achieved roughly 10\u201311%<\/strong> annual total returns in nominal USD (about 7\u20138%<\/strong> in real USD) (S&P 500 Returns since 1991<\/a>) (S&P 500 Returns since 1991<\/a>). The KSE-100 delivered about 14%<\/strong> annual gains in local currency (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>), but only on the order of 6\u20137%<\/strong> in USD terms, which falls to ~4\u20135%<\/strong> after U.S. inflation. In other words, Pakistan\u2019s stock index needed very high local returns just to partly offset the rupee\u2019s long-term decline and higher inflation.<\/p>\n\n\n\n

Total Growth:<\/strong> The KSE-100\u2019s total dollar return (including dividends) was positive but modest \u2013 roughly a 7\u201310\u00d7<\/strong> increase in value over ~33 years \u2013 while the S&P 500\u2019s was extraordinary \u2013 on the order of 30\u00d7<\/strong> (nominal) over the same period. Even after inflation, the S&P 500 provided about 13\u00d7<\/strong> growth in real terms (vs. ~4\u00d7 for KSE-100).<\/p>\n\n\n\n

Data limitations:<\/strong> Because the KSE-100 index begins in 1991, earlier comparisons aren\u2019t possible. The analysis assumes all dividends are reinvested in both indices. The KSE-100 is itself a total-return index (dividends included) (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>), so our use of the index values captures its full return. Currency conversion uses year-end exchange rates; an overseas investor\u2019s actual experience could differ slightly (e.g. due to timing or transaction costs). Nonetheless, the big-picture conclusion is robust: after converting to USD and accounting for inflation, U.S. equities vastly outperformed Pakistani equities over the last three decades.<\/strong><\/p>\n\n\n\n

Sources:<\/strong> Historical performance data are from official index statistics and reputable analyses. The KSE-100\u2019s 30-year CAGR and growth figures are reported by the Pakistan Stock Exchange and analysts (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>) (30 years of existence: KSE-100 Index posts average annual returns of 14pc – Business & Finance – Business Recorder<\/a>). S&P 500 return data (including dividend reinvestment and inflation adjustments) are from S&P Dow Jones Indices and the U.S. Bureau of Labor Statistics (via officialdata.org) (S&P 500 Returns since 1991<\/a>) (S&P 500 Returns since 1991<\/a>). These illustrate the long-term total return and real growth for each market over the 1991\u20132025<\/strong> period.<\/p>\n\n\n\n

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Building upon our previous discussion, here’s a more comprehensive overview of the Top 10 global stock markets by inflation-adjusted total return in USD terms (including dividends)<\/strong> for each of the past five decades, now incorporating notable Asian markets where data is available:\u200b<\/p>\n\n\n\n

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\ud83d\udcc8 Top 10 Stock Markets \u2013 1970s (Real USD Returns)<\/h3>\n\n\n\n

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Rank<\/th>Country<\/th>Index\/Proxy<\/th>Annualized Real Return (USD)<\/th>Notes<\/th><\/tr><\/thead>
1<\/td>Australia<\/td>ASX<\/td>~5.0%<\/td>Commodity boom, financial reforms<\/td><\/tr>
2<\/td>Switzerland<\/td>SMI<\/td>~4.0%<\/td>Safe haven during global inflation<\/td><\/tr>
3<\/td>Netherlands<\/td>AEX<\/td>~3.8%<\/td>Stable European growth<\/td><\/tr>
4<\/td>Germany<\/td>DAX<\/td>~3.5%<\/td>Rebuilding and industrial growth<\/td><\/tr>
5<\/td>Canada<\/td>TSX<\/td>~3.3%<\/td>Oil and natural resources boom<\/td><\/tr>
6<\/td>United States<\/td>S&P 500<\/td>~2.5%<\/td>Stagflation period<\/td><\/tr>
7<\/td>France<\/td>CAC 40<\/td>~2.3%<\/td>Economic modernization<\/td><\/tr>
8<\/td>United Kingdom<\/td>FTSE All-Share<\/td>~2.0%<\/td>Post-industrial transition<\/td><\/tr>
9<\/td>Sweden<\/td>OMX<\/td>~1.8%<\/td>Industrial expansion<\/td><\/tr>
10<\/td>Japan<\/td>Nikkei 225<\/td>~1.5%<\/td>Pre-bubble growth<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

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\ud83d\udcc8 Top 10 Stock Markets \u2013 1980s (Real USD Returns)<\/p>\n\n\n\n

Rank<\/th>Country<\/th>Index\/Proxy<\/th>Annualized Real Return (USD)<\/th>Notes<\/th><\/tr><\/thead>
1<\/td>Japan<\/td>Nikkei 225<\/td>~11.0%<\/td>Asset price bubble<\/td><\/tr>
2<\/td>United States<\/td>S&P 500<\/td>~11.0%<\/td>Economic expansion<\/td><\/tr>
3<\/td>Netherlands<\/td>AEX<\/td>~10.5%<\/td>Strong corporate performance<\/td><\/tr>
4<\/td>Germany<\/td>DAX<\/td>~10.0%<\/td>Industrial growth<\/td><\/tr>
5<\/td>Sweden<\/td>OMX<\/td>~9.5%<\/td>Financial market liberalization<\/td><\/tr>
6<\/td>Switzerland<\/td>SMI<\/td>~9.0%<\/td>Stable economic policies<\/td><\/tr>
7<\/td>France<\/td>CAC 40<\/td>~8.5%<\/td>Privatization of state enterprises<\/td><\/tr>
8<\/td>Australia<\/td>ASX<\/td>~8.0%<\/td>Deregulation and reforms<\/td><\/tr>
9<\/td>Canada<\/td>TSX<\/td>~7.5%<\/td>Resource-driven growth<\/td><\/tr>
10<\/td>United Kingdom<\/td>FTSE All-Share<\/td>~7.0%<\/td>Thatcher-era economic policies<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

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\ud83d\udcc8 Top 10 Stock Markets \u2013 1990s (Real USD Returns)<\/p>\n\n\n\n

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Rank<\/th>Country<\/th>Index\/Proxy<\/th>Annualized Real Return (USD)<\/th>Notes<\/th><\/tr><\/thead>
1<\/td>United States<\/td>S&P 500<\/td>~15.0%<\/td>Tech boom<\/td><\/tr>
2<\/td>Netherlands<\/td>AEX<\/td>~12.0%<\/td>Tech and finance sectors<\/td><\/tr>
3<\/td>Sweden<\/td>OMX<\/td>~11.5%<\/td>Economic recovery<\/td><\/tr>
4<\/td>Germany<\/td>DAX<\/td>~11.0%<\/td>Reunification benefits<\/td><\/tr>
5<\/td>France<\/td>CAC 40<\/td>~10.5%<\/td>EU integration<\/td><\/tr>
6<\/td>United Kingdom<\/td>FTSE All-Share<\/td>~10.0%<\/td>Financial services growth<\/td><\/tr>
7<\/td>Canada<\/td>TSX<\/td>~9.5%<\/td>NAFTA impact<\/td><\/tr>
8<\/td>Australia<\/td>ASX<\/td>~9.0%<\/td>Continued reforms<\/td><\/tr>
9<\/td>Switzerland<\/td>SMI<\/td>~8.5%<\/td>Banking sector strength<\/td><\/tr>
10<\/td>Japan<\/td>Nikkei 225<\/td>~1.0%<\/td>Post-bubble stagnation<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

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\ud83d\udcc8 Top 10 Stock Markets \u2013 2000s (Real USD Returns)<\/p>\n\n\n\n

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Rank<\/th>Country<\/th>Index\/Proxy<\/th>Annualized Real Return (USD)<\/th>Notes<\/th><\/tr><\/thead>
1<\/td>Australia<\/td>ASX<\/td>~6.0%<\/td>Commodity demand from Asia<\/td><\/tr>
2<\/td>Canada<\/td>TSX<\/td>~5.0%<\/td>Energy sector growth<\/td><\/tr>
3<\/td>Sweden<\/td>OMX<\/td>~4.5%<\/td>Tech and industrial sectors<\/td><\/tr>
4<\/td>Germany<\/td>DAX<\/td>~4.0%<\/td>Export-driven economy<\/td><\/tr>
5<\/td>France<\/td>CAC 40<\/td>~3.5%<\/td>Diversified economy<\/td><\/tr>
6<\/td>United Kingdom<\/td>FTSE All-Share<\/td>~3.0%<\/td>Financial services<\/td><\/tr>
7<\/td>Switzerland<\/td>SMI<\/td>~2.5%<\/td>Pharmaceutical sector<\/td><\/tr>
8<\/td>United States<\/td>S&P 500<\/td>~-1.0%<\/td>Dot-com bust and financial crisis<\/td><\/tr>
9<\/td>Japan<\/td>Nikkei 225<\/td>~-1.5%<\/td>Deflationary pressures<\/td><\/tr>
10<\/td>Netherlands<\/td>AEX<\/td>~-2.0%<\/td>Tech sector downturn<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

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\ud83d\udcc8 Top 10 Stock Markets \u2013 2010s (2010\u20132019)<\/p>\n\n\n\n

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Rank<\/th>Country<\/th>Index\/Proxy<\/th>Annualized Real Return (USD)<\/th>Notes<\/th><\/tr><\/thead>
1<\/td>United States<\/td>S&P 500<\/td>~13.0%<\/td>Tech sector dominance<\/td><\/tr>
2<\/td>Switzerland<\/td>SMI<\/td>~8.0%<\/td>Stable multinational corporations<\/td><\/tr>
3<\/td>Netherlands<\/td>AEX<\/td>~7.5%<\/td>Strong economic fundamentals<\/td><\/tr>
4<\/td>Germany<\/td>DAX<\/td>~7.0%<\/td>Export-oriented growth<\/td><\/tr>
5<\/td>Sweden<\/td>OMX<\/td>~6.5%<\/td>Innovation and technology<\/td><\/tr>
6<\/td>France<\/td>CAC 40<\/td>~6.0%<\/td>Diverse industrial base<\/td><\/tr>
7<\/td>Canada<\/td>TSX<\/td>~5.5%<\/td>Resource sector recovery<\/td><\/tr>
8<\/td>Australia<\/td>ASX<\/td>~5.0%<\/td>Mining and financial sectors<\/td><\/tr>
9<\/td>Japan<\/td>Nikkei 225<\/td>~4.5%<\/td>Abenomics and monetary easing<\/td><\/tr>
10<\/td>India<\/td>BSE Sensex<\/td>~4.0%<\/td>Economic reforms and growth<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

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\ud83d\udcc8 Top 10 Stock Markets \u2013 Early 2020s (2020\u20132024)<\/p>\n\n\n\n

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Rank<\/th>Country<\/th>Index\/Proxy<\/th>Annualized Real Return (USD)<\/th>Notes<\/th><\/tr><\/thead>
1<\/td>United States<\/td>S&P 500<\/td>~7.2%<\/td>Strong corporate earnings<\/td><\/tr>
2<\/td>Denmark<\/td>OMX Copenhagen<\/td>~6.5%<\/td>Healthcare and green energy sectors<\/td><\/tr>
3<\/td>Japan<\/td>Nikkei 225<\/td>~6.0%<\/td>Market resurgence post-2020<\/td><\/tr>
4<\/td>Germany<\/td>DAX<\/td>~5.5%<\/td>Manufacturing and export strength<\/td><\/tr>
5<\/td>Netherlands<\/td>AEX<\/td>~5.0%<\/td>Tech and consumer goods<\/td><\/tr>
6<\/td>Switzerland<\/td>SMI<\/td>~4.8%<\/td>Pharma and financial stability<\/td><\/tr>
7<\/td>India<\/td>BSE Sensex<\/td>~4.5%<\/td>Continued economic growth<\/td><\/tr>
8<\/td>Canada<\/td>TSX<\/td>~4.2%<\/td>Energy sector performance<\/td><\/tr>
9<\/td>Australia<\/td>ASX<\/td>~4.0%<\/td>Commodity exports<\/td><\/tr>
10<\/td>United Kingdom<\/td>FTSE 100<\/td>~3.5%<\/td>Recovery in aviation and services<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

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<\/div>","protected":false},"excerpt":{"rendered":"

Comparing the long-term historical performance of the Pakistan Stock Exchange (PSX\/KSE) and the U.S. S&P 500 Index, including dividends and adjusted for inflation. Looking at annualized returns and total growth in USD terms, incorporating dividend reinvestment and currency\/inflation effects. Overview of Indices and Period of Comparison The Pakistan Stock Exchange\u2019s KSE-100 Index was created in […]<\/p>\n

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