PSX Benchmark Index Drops 3.23% Amid US-Iran Tensions Despite Strong Macro Data

The Pakistan Stock Exchange (PSX) experienced a bearish week, with its benchmark index declining by 3.23% to close at 166,596, driven primarily by escalating tensions between the US and Iran and rising Brent crude prices. Despite the market downturn, Pakistan’s macroeconomic fundamentals showed significant improvement. The country received a US$1.3 billion IMF disbursement following the completion of the third EFF review, and successfully launched its inaugural US$250 million Panda Bond in China, which was heavily oversubscribed. Fiscal metrics strengthened as the fiscal deficit narrowed to a record low of 0.7% of GDP, while primary surplus and petroleum levy collections rose substantially. Additionally, auto sales doubled, and remittances increased by 11.4% year-on-year. Foreign exchange reserves edged up to US$15.87 billion. While geopolitical risks regarding the Strait of Hormuz remain a key near-term driver, analysts highlight attractive market valuations and improved external financing outlooks. Top performing sectors included Leasing Companies and Sugar, while Textiles lagged. The government also announced plans to abolish gas cross-subsidies by June 2027 and imported US crude oil for the first time.