Pakistan Stock Exchange Records Third Consecutive Weekly Decline Despite S&P Upgrade

The KSE‑100 index closed the week at 171,021.20 points on the Pakistan Stock Exchange (PSX), falling 2.7 % (‑4,782 points) as persistent geopolitical uncertainty and cautious investor sentiment outweighed a recent rating upgrade.

KARACHI:

The market came under pressure for a third straight week amid escalating tensions, including a Houthi‑announced Red Sea blockade that pushed Brent crude above $100 a barrel. In contrast, S&P Global Ratings upgraded Pakistan’s long‑term sovereign credit rating to “B” from “B‑” with a stable outlook, citing IMF‑backed reforms, improved fiscal performance and stronger foreign‑exchange reserves.

Trading was volatile throughout the week. On Monday the index recovered from early losses to close at 175,928, up 125 points (+0.07 %). Tuesday saw a consolidation session, ending flat at 176,134, gaining 206 points (+0.12 %). Wednesday marked a negative session, with the KSE‑100 losing 1,704 points (‑0.97 %) to close at 174,430. The bearish trend continued on Thursday, when the index dropped 2,691 points (‑1.54 %) to settle at 171,739. The week concluded with a mixed session, shedding 718 points (‑0.42 %) to close at 171,021.

Arif Habib Limited (AHL) noted that the KSE‑100 closed at 171,021.20, down 2.7 % week‑on‑week, as the market remained under pressure throughout the week amid persistent geopolitical uncertainty and cautious investor sentiment.

Gas production declined 1.7 % week‑on‑week to 3,005 million cubic feet per day (mmcfd) in the second week of July 2026, primarily due to lower output at Uch, Kandhkot and Shewa fields. Shewa output fell sharply to 9 mmcfd from 59 mmcfd during the last week of June after disruptions linked to the SNGPL pipeline rupture, while oil production edged down 0.3 % week‑on‑week to 71,344 barrels per day, AHL said.

S&P Global Ratings upgraded Pakistan’s long‑term sovereign credit rating to “B” from “B‑” with a stable outlook, highlighting ongoing IMF‑backed reforms, improved fiscal performance, stronger institutions and higher foreign‑exchange reserves that support economic growth and fiscal consolidation. Banking‑sector deposits rose 15.2 % year‑on‑year to Rs40.9 trillion in June 2026 (June 2025: Rs35.5 trillion), while advances increased 13 % YoY to Rs15.3 trillion and investments climbed 16.4 % YoY to Rs42.6 trillion. Consequently, the advance‑to‑deposit ratio (ADR) stood at 37.4 % (‑74 basis points YoY; ‑173 basis points month‑on‑month), whereas the investment‑to‑deposit ratio (IDR) came in at 104.2 % (+113 basis points YoY; ‑185 basis points MoM).

Petroleum prices were raised during the week, with motor spirit increasing by Rs15.37 to Rs331.52 per litre and high‑speed diesel (HSD) by Rs24.31 to Rs378.66 per litre, driven by the new daily pricing mechanism based on the seven‑day average of Platts prices. The petroleum levy, inland freight equalisation margin and oil‑marketing‑company margins remained unchanged. The Pakistani rupee stayed largely stable against the US dollar, strengthening 0.03 % week‑on‑week to close at Rs277.87/USD, AHL added.

Syed Danyal Hussain of JS Global commented that the KSE‑100 extended its losing streak for the third consecutive week, closing at 171k and falling 2.7 % week‑on‑week, as escalating geopolitical tensions—triggered by the Houthi naval blockade in the Red Sea that pushed Brent crude above $100/barrel—continued to dampen investor sentiment.

On the macro front, the S&P upgrade was attributed to improved institutional stability and effective implementation of IMF‑backed reforms. Domestically, Ogra shifted to a daily petroleum‑price‑adjustment mechanism from Monday, delivering cumulative increases of Rs15.37/litre (+4.9 %) for motor spirit and Rs24.31/litre (+6.9 %) for HSD over the week.

Meanwhile, Pakistan secured $16.2 billion in external financing during FY26, while the government was reportedly seeking a $10 billion facility from the United States to bolster foreign‑exchange reserves and reinforce macroeconomic stability. In the latest T‑bill auction, the government raised Rs768 billion against a target of Rs800 billion, with cut‑off yields rising up to 50 basis points across longer maturities. The State Bank’s foreign‑exchange reserves remained stable on a weekly basis at $17.3 billion, Hussain added.

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