RECORDER REVIEW

KARACHI: Renewed geopolitical tensions between Iran and the United States and the intensifying conflict in the Middle East kept investor sentiment under pressure during the last week.

Concerns over maritime security, global trade disruptions and a fresh surge in international oil prices pushed the benchmark KSE-100 Index of the Pakistan Stock Exchange (PSX) down 4,816.95 points, or 2.7 percent week-on-week, to 170,511.86 points by the weekend.

The equity market remained under continuous selling pressure during the week as geopolitical developments increasingly dominated investor sentiment. The escalation of tensions in the Middle East, particularly intensified clashes involving Saudi Arabia and Iran-backed Houthi insurgents, added to concerns about the stability of important regional trade and shipping routes.

Against this backdrop, global financial markets reacted to the heightened geopolitical risk, while energy markets came under renewed pressure. Brent crude prices moved back above the USD100 per barrel threshold as concerns over supply disruptions intensified.

For Pakistan, the renewed increase in global oil prices represented an additional source of pressure for both consumers and the wider economy. Domestic fuel prices followed the international trend, with motor gasoline, or petrol, increasing by Rs25 per litre week-on-week to Rs370.8 per litre. High-speed diesel (HSD) prices also rose sharply, increasing by Rs20 per litre to Rs398.04 per litre. The increase in both petrol and diesel prices added to concerns over domestic costs at a time when international energy markets were already experiencing heightened volatility.

The sharp decline in the KSE-100 was reflected across virtually all major sectors, with sectoral indices posting negative returns during the week. Engineering emerged as the weakest-performing sector, declining 5.0 percent, followed by Oil and Gas Marketing Companies, which fell 4.8 percent. Cement stocks declined 4.4 percent, while the Refinery sector dropped 4.2 percent despite remaining the largest contributor to total market trading volume.

Pharmaceuticals declined 4.1 percent, while the Textile Composite sector fell 3.9 percent. Commercial Banks lost 3.1 percent, Technology and Communication companies declined 3.0 percent, and Power Generation and Distribution stocks fell 2.8 percent. Autos declined 2.7 percent, matching the overall percentage decline recorded by the benchmark KSE-100.

Oil and Gas Exploration Companies fell 2.6 percent, while Food stocks also declined 2.6 percent. Chemical companies lost 2.1 percent, while Fertilizer stocks were comparatively more resilient but still closed the week 1.7 percent lower. The breadth of the declines demonstrated that selling pressure was not confined to a single area of the market, but instead affected the major segments of the exchange.

Trading activity was particularly concentrated in the Refinery sector, which accounted for 21 percent of total market volume during the week. Technology and Communication companies represented another 15 percent, followed by Investment Banks with 10 percent. Cement stocks accounted for 6 percent of total volume, while Commercial Banks contributed 5 percent. All remaining sectors collectively represented 43 percent of market volume.

Despite the broad market sell-off, a limited number of individual stocks managed to outperform. Pakistan Services Limited (PSEL) was the standout performer, closing at Rs1,087.47, representing a substantial 31.2 percent week-on-week increase. Adamjee Insurance Company Limited (AICL) also advanced, rising 3.7 percent to Rs97.43, while Lucky Core Industries Limited (LCI) gained 1.0 percent to Rs219.26.

Other stocks among the relatively stronger performers recorded only marginal declines. HUM Network Limited (HUMNL) closed at Rs10.17, down 0.4 percent week-on-week, while Dolmen City REIT (DCR) edged down 0.5 percent to Rs40.21. Allied Bank Limited (ABL) declined 0.6 percent to Rs170.21, while Highnoon Laboratories Limited (HINOON) fell 0.7 percent to Rs924.60.

The market’s top decliners, meanwhile, recorded significantly heavier losses. Pak-Gulf Leasing Company Limited (PGLC) closed at Rs16.32, down 13.9 percent week-on-week, while Sui Southern Gas Company Limited (SSGC) also declined 13.9 percent to Rs23.64.

Cherat Cement Company Limited (CHCC) fell 10.0 percent to Rs269.84, while The Bank of Punjab (BOP) declined 9.1 percent to Rs31.72. International Steels Limited (ISL) lost 8.8 percent to close at Rs81.89, while Ghani Automobiles Limited (GAL) declined 8.1 percent to Rs594.49. Ghani Global Holdings Limited (GHNI) also remained under pressure, falling 7.7 percent to Rs1,192.49.

The overall decline in share prices also translated into a substantial reduction in the market’s capitalisation. PSX market capitalisation fell 3.1 percent to Rs19,015.67 billion from Rs19,629.22 billion in the previous week. This represented a reduction of Rs613.55 billion in market value over the week.

In US dollar terms, total market capitalisation declined by 3.1 percent to USD68.57 billion from USD70.76 billion, representing a reduction of USD2.19 billion.

Trading activity also weakened significantly in the Readyboard market. Readyboard average daily traded volume (ADTO) declined 16.6 percent to 639.13 million shares, compared with 766.74 million shares during the preceding week. The contraction in volume was accompanied by an even larger decline in traded value.

Readyboard ADTO in rupee terms fell 18.7 percent to Rs27.00 billion from Rs33.20 billion. In US dollar terms, average daily traded value also declined 18.7 percent to USD97.34 million from USD119.67 million.

The broader benchmark indicators also reflected the weekly decline. The BRIndex100 opened at 19,359.39 points and closed at 18,764.80 points, with total weekly turnover of 2.45 billion shares. The index therefore declined by 594.59 points between its opening and closing levels.

The BRIndex30 opened at 71,381.77 points and closed at 68,350.03 points, recording total weekly turnover of 1.33 billion shares. The index lost 3,031.74 points over the course of the week, underscoring the broad-based weakness in the more actively traded segment of the market.

While geopolitical developments remained the principal factor affecting investor sentiment, domestic macroeconomic and policy developments also remained closely watched. Market participants continued to focus on Pakistan’s external-sector position, particularly as international oil prices moved above USD100 per barrel and raised concerns about the potential implications of higher energy costs.

Against this backdrop, Pakistan’s foreign exchange position provided an element of support. Foreign exchange reserves held by the State Bank of Pakistan increased by USD1.2 billion week-on-week to USD18.3 billion.

Remittance inflows also remained strong. Overseas Pakistani workers sent USD3.65 billion in August 2026, representing a 17 percent year-on-year increase. The monthly inflow took cumulative remittances during the first two months of fiscal year 2027 to USD7.2 billion, up 15 percent year-on-year.

The market was also preparing for an important engagement with the International Monetary Fund. The IMF’s fourth review under the current programme is scheduled to commence next week, keeping the country’s external-sector assessment and programme implementation under close observation.

Policy developments in the automobile industry also remained part of the market’s broader economic narrative. Government committees have finalized the draft Auto Policy 2026–31 following a stringent review process. The proposed policy places an aggressive emphasis on accelerating electric vehicle adoption in Pakistan.

The proposed focus on electric vehicles represents a key component of the draft five-year automobile policy, but the government’s engagement with the IMF remains an important step before the policy can be formally implemented. For the equity market, the policy development is particularly relevant against a backdrop in which automobile stocks declined 2.7 percent during the week.

Overall, the week ended September 11 was marked by a combination of heightened geopolitical risk, rising global crude prices, higher domestic fuel prices and broad-based equity selling. The escalation involving Saudi Arabia and Iran-backed Houthi forces around the Bab-el-Mandeb Strait intensified concerns over maritime security and global trade flows, while Brent crude’s return above USD100 per barrel added to pressure on energy-importing economies such as Pakistan.