PSX edges up amid ME tensions

The KSE-100 index gained 0.22% week-on-week to close at 170,885 points at the Pakistan Stock Exchange (PSX) as geopolitical tensions kept the market under pressure for most of the week before expectations of diplomatic engagements ahead of the UN General Assembly session lifted investor sentiment. On a day-on-day basis, g, which ed almost the whole week, swayed on Monday, and the PSX witnessed a negative session. The KSE-100 declined 2,541 points (-1.49%) to close at 167,971. Nevertheless, Tuesday was a positive day. The index gained 1,422 points (+0.85%) to close at 169,392. Wednesday was again a negative day, when the market fell 1,371 points (-0.81%) at 168,022. Last two days of the trading week recorded consolidation near 170k. On Thursday, the KSE-100 gained 1,021 points (+0.61%) to close at 169,043 while it posted a gain of 1,841.39 points, or 1.09%, on Friday and settled at 170,884.59. Arif Habib Limited (AHL) observed that the KSE-100 index rose 0.22% week-on-week to close at 170,885 points versus 170,512 last week as the market remained under pressure from geopolitical concerns for most of the week before sentiment was lifted by anticipation of diplomatic engagements ahead of the UNGA session commencing September 22. The monetary policy committee (MPC) kept the policy rate unchanged at 11.5%, with seven out of ten members voting in favour of the decision. The committee noted that the intensifying Middle East conflict pushed the already elevated global commodity prices higher, while supply chain disruptions persisted. In Aug'26, a current account deficit of $98 million was recorded, compared to a deficit of $324 million in Aug'25 and a deficit of $445 million in Jul'26. Pakistan's trade deficit rose 15.1% year-on-year to $3.3 billion in Aug'26 as exports fell 5.2% YoY (-13.9% MoM) to $2.5 billion while imports rose 10.6% YoY (-15.2% MoM) to $5.8 billion. During 2MFY27, the net foreign direct investment inflow went up by 24% YoY to $494 million compared to the inflow of $399 million in 2MFY26, noted AHL. During Aug'26, technology exports rose 17% YoY, but fell 6% MoM, to $394 million, contributing 45% to the overall services. Auto sales (cars, LCVs, vans & jeeps) rose 11% YoY but fell 21% MoM to 15.6k units in Aug'26. Excluding Sazgar Engineering, which did not report Aug'26 numbers, volumes were up 20% YoY and down 19% MoM. Auto financing increased 33.8% YoY to Rs393 billion in Aug'26, up from Rs294 billion in Aug'25. On a MoM basis, it increased 1.8%. Oil production declined 1.4% WoW to 67.5k barrels per day, mainly due to lower flows from Makori East and Pasakhi, while gas production decreased 2.6% WoW to 3,008 million cubic feet per day, driven by lower production from Mari and Shewa. State Bank's reserves rose $3,061 million WoW to their highest-ever level of $21.4 billion, post-Eurobond receipts, marking the largest weekly increase since June 2025. The rupee appreciated marginally by 0.03%, closing at Rs277.25/$ versus Rs277.32/$ previously, AHL said. Wadee Zaman of JS Global noted that the KSE-100 remained volatile during the week, rising by 72 points WoW to 170,885 as geopolitical tensions between Iran and the US persisted, although direct skirmishes between the two sides eased. Meanwhile, continued clashes between the Houthis and Saudi Arabia pushed Brent crude higher, with prices peaking at $109/barrel before retreating to around $103 during the week. On the domestic front, fuel prices continued their upward march, with petrol rising Rs19.99 WoW to Rs390.79/litre, while high-speed diesel prices increased Rs26.88 to Rs424.92/litre. The State Bank kept its policy rate unchanged at 11.5%, noting that recent domestic macroeconomic data remained broadly in line with MPC's expectations. Pakistan's current account deficit narrowed 78% YoY in Aug'26 to $98 million as a lower import bill and reduced income outflows more than offset weaker exports. The 2MFY27 deficit stood at $543 million, down 36% YoY. Meanwhile, large-scale manufacturing grew a modest 3% YoY, while rising 9.5% MoM in Jul'26. On the external front, Pakistan was seeking to expand its China swap line, due to expire in 2027, while awaiting the US response to a proposed $10 billion exchange stabilisation facility, Zaman said.