Foreign outflows, rising oil prices and geopolitical tensions shake investor confidence
The Pakistan Stock Exchange (PSX) experienced a turbulent start to 2026, as the benchmark KSE-100 Index recorded sharp volatility and emerged among the worst-performing equity markets globally in the first quarter.
The index lost շուրջ 15 percent during Q1, pressured by global uncertainties, foreign investor outflows, and domestic economic challenges. March proved particularly difficult, with the index plunging over 19,000 points, or 11.5 percent, closing the month at 148,743 points. Market swings remained extreme, with the index peaking at 161,475 points mid-month before dropping to a low of 144,119 points.
Key Factors Behind Market Decline
Analysts attributed the downturn to sustained foreign selling, especially in banking and cement stocks, alongside cautious local participation. Rising global oil prices, with Brent crude oil hovering near $107–108 per barrel, added pressure on Pakistan’s energy-dependent economy.
Geopolitical tensions in the Middle East further dampened sentiment, although a brief recovery emerged on March 31. The market gained 1,900 points after optimism grew over easing tensions following remarks by Donald Trump regarding progress in talks with Iran.
Despite positive signals such as a current account surplus and stable monetary policy, investor confidence remained fragile. Going forward, analysts say the PSX’s direction will depend on oil price trends, geopolitical stability, and Pakistan’s ability to secure external financing and maintain political stability.
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