Geopolitical Strains Pull Pakistan Stock Market Down

Investor sentiment was dampened by escalating U.S.–Iran tensions, pulling the Pakistan Stock Exchange lower as concerns over regional stability and higher oil prices prompted cautious trading across most sectors.

The benchmark KSE‑100 Index declined 2.0 % (3,483.87 points) to 170,478.94 points compared with 173,962.81 points a week earlier, remaining under pressure throughout the week as military tensions heightened uncertainty over global energy supplies and broader geopolitical stability.

The Business Recorder indices reflected the market’s weakness; the BRIndex100 fell 419.04 points to 18,850.25, with total turnover of 2.14 billion shares (average daily 427.85 million). Similarly, the BRIndex30 dropped 1,077.44 points to 68,904.70, with turnover of 1.53 billion shares (average daily 306.36 million).

JS Research noted subdued investor confidence amid fears that further conflict escalation could disrupt oil flows and add inflationary pressure, prompting Brent crude to rise 4.0 % week‑on‑week to $95 per barrel.

Domestic macro‑economic indicators presented a mixed picture: Pakistan’s monthly trade deficit narrowed 14 % year‑on‑year to $2.6 billion due to a 7 % decline in imports, yet the cumulative deficit widened 17.5 % year‑on‑year to $34.8 billion as imports rose 5.9 % over the same period last year.

Inflationary pressures intensified, with the Consumer Price Index accelerating to 11.7 % in May 2026, the highest level recorded in the past 23 months, reinforcing concerns about monetary policy and higher energy costs.

Fiscal challenges persisted; the Federal Board of Revenue missed collection targets, resulting in a Rs868 billion shortfall during 11MFY26, with total collections of Rs11.2 trillion against a revised target of Rs12.09 trillion.

The Federal Budget 2026‑27 was postponed to June 10 amid ongoing IMF negotiations on revenue measures, development spending and fiscal consolidation, prompting a wait‑and‑see stance among investors.

State Bank of Pakistan’s foreign exchange reserves rose USD43 million week‑on‑week to $17.19 billion as of May 29, 2026, indicating relative stability in the external position despite rising geopolitical risks.

A weekly snapshot showed market capitalisation declining 1.2 % to Rs18.93 trillion (USD67.99 billion) versus Rs19.17 trillion ($68.82 billion) a week earlier, while average daily traded volume increased 17.5 % to 623.37 million shares, but turnover value fell 24.4 % to Rs27.22 billion (USD97.74 million).

Sector‑wise performance was broadly negative; only the Technology and Communication sector (+1.8 %), Engineering (+0.4 %), Chemical (+0.1 %) and Food (+0.1 %) posted gains, while the Power sector fell 3.1 %, Exploration and Production 2.9 %, Cement 2.6 %, Oil Marketing 2.1 %, and the KSE‑100 Index declined 2.0 %. Other laggards included Refineries, Banks, Fertiliser, Pharmaceuticals, Automobiles and Textile Composite.

Trading activity concentrated in a few key sectors: Technology and Communication accounted for 17 % of total volume, Cement 11 %, Oil Marketing 8 %, Engineering 7 %, Food 7 %, with all other sectors collectively contributing 50 % of market turnover.

Among individual stocks, Honda Atlas Cars led gains with an 11.6 % rise to Rs269.12, followed by PSX (+11.0 %), Ghani Glass (+6.9 %), IBL Finance (+6.4 %), PGLC (+5.4 %), PTC (+5.2 %) and HGFA (+4.2 %). Losers were led by Ghani Global Holdings (-5.4 %), National Bank of Pakistan (-5.2 %), Attock Petroleum (-5.1 %), Engro Holdings (-5.1 %), Packages (-4.9 %), Lucky Cement (-4.8 %) and Maple Leaf Cement (-4.5 %).

Regionally, the Philippines (+2.9 %) and Taiwan (+0.8 %) and Malaysia (+0.6 %) posted gains, while Indonesia fell 8.7 %, South Korea 3.7 %, China 1.0 % and India 0.7 %.

Overall, the market remained hostage to geopolitical developments, with rising oil prices, accelerating inflation, fiscal pressures and budget uncertainty outweighing the positive impact of improving external reserves and stronger trading activity. Investors are expected to closely monitor US‑Iran developments, IMF negotiations and the upcoming budget for directional cues in the coming weeks.

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