PSX Surges to Record High Following Pakistan-Saudi Defense Pact
KARACHI: The Pakistan Stock Exchange (PSX) achieved a historic milestone on Thursday, closing at a record high near the 158,000-point mark, despite recent economic headwinds including a current account deficit and the aftermath of flooding.
The benchmark KSE 100 index climbed 1,775.65 points, representing a 1.14 percent increase, to settle at 157,953.47. This significant rally was largely fueled by positive investor reaction to the newly signed Strategic Mutual Defence Agreement (SMDA) between Pakistan and Saudi Arabia.
The SMDA, formalized during Prime Minister Shehbaz Sharif’s visit to Riyadh, is anticipated to strengthen bilateral relations and potentially unlock opportunities for Pakistani defence exports. The agreement, which establishes a mutual defence commitment - considering aggression against one nation as aggression against both – has been interpreted as bolstering pakistan’s regional security position. The proclamation propelled the PSX to an intraday peak of 1,904 points.
Recent economic data revealed a current account deficit of $245 million in August, following a $379 million deficit in July. This represents a widening from the $82 million deficit recorded in August 2024.
Strong performance from leading companies underpinned the market’s gains. Engro Holdings, National Bank of pakistan, Mari energies, United Bank, and Bank of Punjab collectively contributed 733 points to the index’s overall increase. Trading activity also saw a significant rise, with volumes increasing by 30.66 percent to 1.95 billion shares, and the value of shares traded growing by 16.54 percent to Rs56.9 billion. Cnergyico PK led in trading volume, with 213 million shares changing hands.
Ali Najib, Deputy Head of Trading at Arif Habib Ltd, commented that the PSX had demonstrated a robust recovery after a period of consolidation, nearing the significant 158,000-point level.
Contributing to the positive market sentiment were favorable global economic indicators. The US Federal Reserve’s recent 25 basis point interest rate cut, coupled with signals of further easing in 2025, boosted investor confidence in emerging markets.
Domestically, the goverment’s accomplished auction of Rs195 billion in T-bills, exceeding its Rs175 billion target, provided further reassurance. The rejection of bids for high-cost Pakistan Investment Bonds (PIBs) indicated confidence in a loosening monetary policy, which is expected to stimulate increased investment in the equity market.
(Published in Dawn, September 19th, 2025)