Karachi: The global stock market faced significant pressure this past week as escalating tensions along key shipping routes involving the United States and Iran contributed to heightened instability. Concurrently, attacks by Yemen's Houthi rebels on Saudi energy facilities intensified global energy worries, driving up oil prices. Brent crude oil reached a four-month high of $109 per barrel before a decline on Friday contributed to a slight market recovery.
According to AKD Securities Limited, the domestic market also felt the impact of rising oil prices, with local fuel prices increasing, resulting in High-Speed Diesel (HSD) and Motor Spirit (MS) prices climbing by PkR23.7 and PkR21.8 week-over-week, respectively. The benchmark KSE-100 Index fell by 4,817 points, representing a 2.7% decline from the previous week, closing at 170,512 points. Market activity weakened, with average daily trading volume dropping by 17.5% to 801 million shares.
However, Moody's noted that Pakistan has managed to absorb the current conflict's shock better than the 2022 crisis due to improved macroeconomic indicators. Worker remittances in August 2026 rose by 17% year-over-year to $3.7 billion, while the State Bank of Pakistan's foreign exchange reserves increased by $1.2 billion to $18.3 billion as of September 4, 2026, amid loan proceeds. On the policy front, the Prime Minister approved the draft auto policy for the fiscal year 2027-31, though pending IMF approval, while digital banking saw a 58% year-over-year rise in Roshan Digital Account inflows to $259 million in August 2026.
Looking ahead, market analysts expect improvements driven by strengthening economic indicators, with the upcoming IMF review and monetary policy announcement anticipated as key near-term catalysts. A potential U.S.-Iran agreement could also moderate international oil prices. The market continues to trade at attractive valuations, with a forward price-to-earnings ratio of 7.2x. Projections suggest the KSE-100 Index could reach 263,800 by December 2026. Notable stock picks include OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP, and SYS.