Pakistani Equities Show Resilience with Slight Gains Despite Economic Headwinds
Pakistani equities experienced a week of modest gains, with the KSE 100 index closing at 162,102.92 points, a rise of 168 points. This positive movement occurred despite a lack of significant market triggers and ongoing economic uncertainties, reflecting a cautious optimism amongst investors.
Foreign investment inflows reached $179 million, marking a 23% year-on-year increase, although a slight month-on-month decline was observed. Investor caution was attributed to mixed economic data released during the week.
A bright spot in the economic landscape was the record-breaking performance of Pakistan’s technology exports, hitting $386 million in October. This represents a 17% increase year-on-year and a 5% increase month-on-month, highlighting the growing importance of the tech sector to the nation’s export economy.
The gains in the KSE 100 were largely driven by sector-specific factors. Fauji Fertiliser Company benefited from its inclusion in the KMI-30 Index, while pakistan Petroleum Ltd saw increased investor interest linked to offshore activities. Pioneer Cement also experienced a rally fueled by speculation surrounding potential mergers and acquisitions.
Trading activity remained relatively subdued, with an average daily volume of 1.05 billion shares and an average value of Rs37.8 billion. Investors largely remained on the sidelines, awaiting further clarity on the broader economic situation.
The banking sector presented a mixed picture. Deposits increased by 13% year-on-year to Rs35.2 trillion in October, but advances declined by 3.6% to Rs13.3 trillion, indicating a tightening of credit availability amidst economic uncertainty. Power generation decreased by 3.7% year-on-year to 9,886 GWh, although generation costs fell by 6% to Rs8.51 per kWh, partially due to declining global crude oil prices.
Energy sector imports showed varied trends. Crude oil imports rose by 28.5% year-on-year to 691,479 tonnes, and petroleum, oil and lubricants imports increased by 30.6%. However, regasified liquefied natural gas arrivals decreased by 11% year-on-year, while furnace oil exports surged to 214,000 tonnes.
Looking forward, analysts at Arif Habib Ltd (AHL) anticipate the KSE 100 index will likely maintain its positive momentum, particularly if geopolitical tensions ease.The index is currently trading at a price-to-earnings ratio (PER) of 8.18x, below its 15-year average of 8.59x, and offers a dividend yield of approximately 5.9%.
AKD Securities highlighted expectations of increased foreign portfolio and direct investment, spurred by improved relations with the united States and Saudi Arabia, as a positive factor. The anticipated approval of Pakistan’s second review under the Extended Fund facility and Resilience and Sustainability Fund by the IMF, perhaps releasing $1.2 billion, is also expected to provide stability.
However, challenges remain. The ongoing deadlock in peace talks with Afghanistan continues to weigh on market sentiment,and concerns regarding governance and corruption were raised following the release of the IMF’s Governance and Corruption Diagnostic Assessment Report.
Despite these challenges, AKD Securities maintains a positive outlook, citing the index’s attractive valuations and dividend yield. The firm believes the market will likely remain volatile but trend positively in the near term, contingent on resolving geopolitical issues and implementing effective economic reforms.
(Published in Dawn, November 23rd, 2025)
