The Pakistan Stock Exchange (PSX) witnessed a significant downturn on Thursday, with shares plummeting more than 1,000 points. At 10:08 am, the KSE-100 index reported a loss of approximately 1,038 points, and by 10:31 am, it had cumulatively fallen by 770.12 points, reaching 62,797.21—a decline of 1.21% from the previous close of 63,567.33.
The abrupt decline was attributed to the escalating tensions between Pakistan and Iran. The recent events included attacks by Iran on alleged bases of the militant group Jaish al-Adl in Panjgur, Balochistan, resulting in strong condemnation from Islamabad and a subsequent downgrade of diplomatic ties.
Mohammed Sohail, Chief Executive of Topline Securities, linked the market’s sudden shift to the news of increasing tensions between the two countries. Raza Jafri, Head of Equities at Intermarket Securities, mentioned that border tensions with Iran appeared to be affecting investor sentiment, offsetting positives in the external account, such as a healthy current account surplus and UAE’s debt rollover.
In response to Iran’s attacks, Pakistan announced that it had struck terrorist hideouts in Iran’s Sistan-o-Baluchistan province. Yousuf M. Farooq, Director of Research at Chase Securities, noted that the stock market initially responded unfavorably to Pakistan’s retaliatory attack on Iran, expressing concerns about potential escalation.
However, Farooq highlighted a modest recovery from the initial low of 1,038 points, supported by robust current account numbers, debt rollover from the UAE, and a tranche release by the International Monetary Fund (IMF). He mentioned that investors anticipate a diplomatic resolution to the issue, and the 1% decline is not indicative of panic among investors, “at least in the first hour of trading.”
Simultaneously, the country’s international bonds experienced declines after the foreign ministry confirmed strikes inside Iran. The 2026 bond suffered notable drops, falling 1.2 cents to trade at 71.125 cents in the dollar.
Investors are closely monitoring developments, and the market’s future trajectory is expected to be influenced by diplomatic efforts to de-escalate tensions between Pakistan and Iran.
