Islamabad: The KSE-100 index recorded a decline of 2.6% over the past week, influenced by ongoing political turmoil and economic instability in Pakistan. This trend was accompanied by a significant reduction in both the number and value of shares traded, reflecting a cautious stance among investors.

According to JS Global, the week's downturn in market activity was exacerbated by the uncertainty surrounding the anticipated approval from the IMF's executive board for a new Extended Fund Facility worth US$7 billion. Simultaneously, the government is in discussions with China to reprofile energy debt and plans to transition the consumption of imported coal in power plants to domestically sourced Thar coal. Additionally, efforts to issue panda bonds indicate a strategy to diversify funding sources and attract new investors.

The report further notes a decline in the State Bank of Pakistan's reserves, which fell by US$397 million due to external debt repayments. In contrast, power generation in June 2024 saw a month-over-month increase of 7%, reaching a 10-month high, largely due to elevated demand during the summer months. Moreover, recent treasury bill auctions saw a decline in cut-off yields for 3, 6, and 12 months, suggesting a potential easing in borrowing costs moving forward.