KARACHI: The Pakistan Stock Exchange (PSX) managed to close the first week of December in positive territory, despite early volatility and a lack of positive economic triggers. Investors were seen taking profits after a turbulent start, but mid-week developments, particularly in the political and investment sectors, provided some much-needed optimism.
According to Topline Securities, the KSE-100 index rose by 0.24 per cent on a week-on-week basis, buoyed by the approval of the prime minister’s summary for Field Marshal Syed Asim Munir’s appointment as Chief of Defence Forces, ending months of uncertainty. Additionally, Saudi Arabia’s decision to extend its $3 billion deposit with Pakistan’s central bank for another year was a key catalyst for market recovery.
Pakistan’s headline inflation for November stood at 6.15pc, slightly down from 6.24pc in October, indicating a minimal change. Meanwhile, the country’s trade deficit for November widened to $2.86bn, a 33pc year-on-year increase. Exports fell by 15.4pc year-on-year, while imports saw a modest 5.4pc rise, further exacerbating the trade imbalance.
Other economic indicators showed mixed results. Cement despatches (domestic and exports) dropped by 3.2pc year-on-year in November, while urea offtake surged by 25pc year-on-year, driven by strong demand for the rabi season.
Index posts modest rise as political clarity and Saudi rollover boost investor confidence
On the foreign reserves front, the State Bank of Pakistan’s reserves increased by $14m to $14.57bn. The commercial banks’ foreign exchange holdings remained stable at $5.01bn, pushing the country’s total liquid reserves to $19.59bn.
The cement sector emerged as a major contributor to the KSE-100’s weekly performance, adding 535 points, with the sector benefiting from a 2pc year-on-year growth in local despatches. Meanwhile, the energy and petroleum (E&P) sector added 351 points, driven by progress on the LNG diversion plan and the auction of offshore blocks, which attracted Turkish investment.
AKD Securities noted that market participation dropped by 22pc week-on-week due to volatility, with average traded volume declining to 680m shares from 863m the previous week. However, the market closed on a positive note, largely thanks to developments on the political and international fronts.
According to Arif Habib Ltd (AHL), the KSE-100 index rose modestly from 166,677 to 167,086 points, a 407.88 points week-on-week increase. The IMF’s Executive Board’s anticipated approval of a $1.2bn disbursement under the Extended Fund Facility (EFF) and Resilience and Sustainability Fund (RSF) on Monday is expected to bolster investor sentiment further. Additionally, the government’s progress in tackling the power sector’s circular debt could provide further optimism.
The market’s current price-to-earnings (P/E) ratio of 8.43x is slightly below its 15-year average of 8.59x, while its dividend yield of 5.78pc is also somewhat lower than the historical average of 6.11pc. These factors make local equities attractive relative to other investment avenues.
Central government debt rose to Rs77 trillion in October, reflecting a 0.5pc month-on-month increase and an 11.4pc year-on-year rise. Despite this, the rupee showed signs of stabilisation, appreciating by 0.04pc week-on-week to close at Rs280.42 against the US dollar.
AKD Securities foresees continued momentum in the KSE-100 index, supported by successful IMF Executive Board approval, reduced flood impacts, and improved credit ratings by global agencies. These developments, alongside the likelihood of foreign portfolio and direct investment inflows, particularly from Saudi Arabia and the US, could provide a foundation for sustained market growth.
Looking ahead, AHL analysts expect the positive market sentiment to persist, particularly in the wake of an inflow of $1.2bn from the IMF.
The outlook remains cautiously optimistic, with investors focusing on economic stabilisation and political developments as key drivers for the market in the near term.Political stability and foreign support are key factors keeping investor confidence afloat, even as ongoing issues like the trade deficit and inflation continue to weigh on sentiment.
With key IMF approvals on the horizon, market participants will be closely watching any further developments that could affect the investment climate.
Published in Dawn, December 7th, 2025