Islamabad: Pakistan's benchmark stock index reached a record high of 154,277 points, surging 3.8% this week, its fourth-best weekly performance this year. This surge comes after Prime Minister Shehbaz Sharif's visit to China, which yielded $8.5 billion in Memoranda of Understanding (MoUs) and joint ventures at the second Pakistan-China investment conference.
The market rally was fueled by various positive factors, including increased industrial production, moderated inflation at 3.0% year-on-year in August, and robust corporate earnings. The cement industry contributed significantly to the gains, driven by growing domestic demand and increased mortgage financing. Commercial banks also performed well, buoyed by strong financial results.
Other positive economic indicators include a 7% year-on-year rise in petroleum product transactions due to improved demand and a 2.1-fold increase in local mobile phone manufacturing in July. In a Treasury bill auction, one-month paper yields decreased to 10.75%. However, the trade deficit expanded by 30% year-on-year in August due to weaker exports.
Market engagement grew by 19% week-on-week, with average trading volume increasing to 1.068 billion shares. The Pakistani Rupee slightly appreciated against the US dollar, closing at PkR281.65/US$. Other significant developments included the early repayment of PkR2.6 trillion in debt, the State Bank governor's GDP growth projection of 3.45-4.25% for fiscal year 2026, plans to legalize digital currencies, a 9% year-on-year increase in cotton arrivals, and a $28 million weekly rise in the State Bank's foreign exchange reserves to $14.3 billion.
Cement, refinery, and power generation sectors were among the top performers. Conversely, jute, synthetic and rayon, and vanaspati and allied industries experienced declines. Individual and mutual fund investors were net buyers, while banks and foreign investors were net sellers.
Market analysts predict continued positive momentum in the coming weeks, with attention focused on the upcoming Monetary Policy Committee meeting and developments related to circular debt. The KSE100 index is projected to reach 165,215 points by December 2025, supported by strong earnings in fertilizers, sustained returns on equity in banks, and improving cash flows of energy and oil marketing companies, benefiting from lower interest rates and economic stability.