Geopolitical tensions drag stocks down

Pakistan Stock Exchange (PSX) extended its losing streak during the outgoing week, with the KSE-100 Index shedding 1.3% week-on-week to close at 175,329 points, as renewed US-Iran tensions and higher crude oil prices kept investors on the defensive.

The index remained under pressure despite intermittent support from corporate earnings and local buying, recording declines in the first half of the week before recovering modestly in the final two sessions.

On a day-on-day basis, the PSX commenced trading week with a consolidation session, where the KSE-100 declined 721 points (-0.41%) to close at 176,976. On Tuesday, the bourse kicked off September and saw investors walking on a tightrope. The index fell 508.69 points, or 0.29%, to settle at 176,466.99.

Geopolitics weighed on market sentiment on Wednesday. The PSX registered a negative session, declining 1,690 points (-0.96%) to close at 174,777. Thursday was a flattish day, when the index edged higher by 153 points (+0.09%) to 174,930. Friday marked modest gains as the KSE-100 rose 399 points (+0.23%) to close the week at 175,329.

Arif Habib Limited (AHL), in its report, noted that the KSE-100 consolidated its position amid renewed US-Iran tensions, with support from corporate earnings partly offsetting a cautious investor stance. The index closed at 175,329 points, down 1.3% week-on-week.

Among major economic developments, AHL mentioned, the Federal Board of Revenue (FBR) collected Rs902 billion in August 2026 (+2% year-on-year), falling Rs28 billion short of the Rs930 billion target, while 2MFY27 collection stood at Rs1,722 billion (+5% YoY), Rs12 billion above the Rs1,710 billion target.

The Consumer Price Index (CPI) for August clocked in at 11.15% YoY compared to 9.2% in July. Fitch Ratings assigned Pakistan's proposed US dollar bond and MTN programme a 'B' rating with an 'RR4' recovery rating, indicating average recovery prospects.

Oil marketing companies' (OMC) sales declined 3% YoY to 1.26 million tons in August 2026, driven by high-speed diesel (+32%) and motor spirit (-9%) demand amid higher fuel prices. Month-on-month, sales fell 16%. Refinery supplies surged 32.2% YoY to 964k tons in August, driven by strong MS, HSD and furnace oil demand, but declined 15.7% MoM due to lower OMC purchases amid higher domestic prices. For 2MFY27, refinery sales rose 40.2% YoY to 2,107k tons.

Naya Nazimabad Apartments REIT saw an exceptional 8x oversubscription, achieving the upper price ceiling of Rs23 and raising Rs1 billion in equity, said AHL. T-bill auction yields declined across most tenors, with the government raising Rs680.1 billion against the target of Rs800 billion, mainly through the three-month tenor at Rs387.8 billion.

Pakistan posted a $3.2 billion trade deficit in August, with exports up 3.8% YoY to $2.5 billion and imports up 7.4% YoY to $5.7 billion. Urea offtake declined 14% YoY in August to 701k tons, with Engro Fertilisers the only player posting growth (+18% YoY), while 8MCY26 offtake remained broadly flat at 3.79 million tons. Cement dispatches rose 3% YoY in 2MFY27, despite August sales declining by 1% YoY to 4.04 million tons amid softer domestic demand, as per AHL.

Topline Securities, in its weekly review, noted that continuing its downward momentum, the KSE-100 index dipped by 1% WoW, primarily driven by escalating US-Iran tensions and higher crude oil prices. Major developments during the outgoing week were Pakistan's CPI for August 2026 clocking in at 11.1% compared with July CPI of 9.2%, trade deficit for August coming in at $3.2 billion (up 10% YoY but down 20% MoM) and the government raising $3 billion through dual-tranche Eurobond for five- and 10-year tenors at 7.5% and 7.9%, respectively.

Individuals and local companies were largely buyers in the market as they purchased net equities worth $15 million and $5.7 million, respectively, as of Friday's close, whereas mutual funds and foreign corporates were major sellers, as they sold net equities worth $15 million and $10.2 million, respectively. Average daily traded volume and value during the week stood at 767 million shares and Rs33 billion, respectively, Topline said.