Pakistan Stock Exchange Plummets Amid Escalating Middle East Conflict

Panic selling gripped the Pakistan Stock Exchange (PSX) on Wednesday as investors reacted to intensifying U.S.-Iran tensions, erasing substantial gains in a single trading session. The benchmark KSE-100 index dropped 4,626.18 points, or 2.48%, to close at 181,629.37.

The bourse opened sharply lower following new U.S. military strikes on Iran and heightened sanctions targeting Iranian crude exports. Within minutes of the opening bell, the index fell by nearly 2,500 points, reflecting widespread selling as traders moved assets to safer investments.

Subsequent losses accelerated in the latter half after U.S. President Donald Trump announced the collapse of an interim deal seeking to end hostilities with Iran. This sparked renewed fears of an extended conflict, drove global crude prices sharply upward, and intensified the exodus from riskier assets across global markets.

In the local market, panic selling deepened, with the KSE-100 nosediving to 179,510 around 2 p.m., representing a staggering decline of over 6,700 points. Bargain hunting emerged in the final hour, recovering approximately 2,100 points before the closing bell.

Heavy stock liquidation occurred across major sectors, including oil and gas exploration, commercial banks, fertilizers, cement, power generation, and technology, as investors reduced exposure amid heightened uncertainty.

Ahmed Sheraz, an equity trader at KTrade Securities, noted the KSE-100 experienced a sharp correction amid broad-based selling pressure, though trading activity remained robust with 572 million shares changing hands, indicating strong participation despite high volatility.

He stated that commercial banks, cement, oil and gas, fertilizers, investment banks, power, and technology stocks led the decline, with United Bank, Fauji Fertiliser, Engro Holdings, Lucky Cement, Hub Power, HBL, Pakistan Petroleum, and OGDC contributing most significantly to the losses.

Looking ahead, Sheraz emphasized that market direction will largely depend on developments in the Middle East, particularly around the Strait of Hormuz and their impact on oil prices. While geopolitical uncertainty may sustain elevated volatility in the near term, signs of de-escalation could help restore investor confidence and support market recovery.

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