Improved geopolitical sentiment and strong liquidity support Pakistan Stock Exchange during the week ended May 22
The benchmark KSE-100 Index posted a gain of 2,248 points during the week ended May 22, 2026, as investor sentiment improved on easing geopolitical concerns and strong participation in domestic financial markets.
The index closed the week at 167,844.24 points, rising 1.36% on a week-on-week basis.
Analysts said the market remained largely driven by developments surrounding US-Iran negotiations and expectations of reduced tensions in the Middle East, which eased concerns over potential disruptions in global oil supplies.
Pakistan’s reported role in facilitating diplomatic engagement between the two sides also helped support investor confidence, contributing to improved sentiment at the Pakistan Stock Exchange.
Strong investor activity
During the week, the initial public offering (IPO) of SLM Tyres attracted record investor participation, receiving bids worth around Rs70 billion and becoming oversubscribed by 16.7 times.
Analysts said the strong response reflected improving market confidence and abundant liquidity in the equity market.
Auto financing also showed recovery momentum, rising 36.6% year-on-year to Rs360 billion in April 2026, while posting a 4.1% month-on-month increase amid improving consumer sentiment.
Government borrowing and external sector updates
The government exceeded its target in the Pakistan Investment Bonds (PIB) auction, raising Rs652 billion against a target of Rs350 billion, with most allocations concentrated in the 15-year tenor.
Meanwhile, the treasury bill auction also witnessed strong participation, with Rs702 billion raised against a target of Rs450 billion. Yields increased across all tenors.
Pakistan’s current account recorded a deficit of $252 million during the first 10 months of FY26, compared with a surplus of $1.66 billion in the corresponding period last year.
Data also showed that the country posted a current account deficit of $324 million in April 2026 compared with a surplus of $1.13 billion in March 2026.
Energy and reserves
Oil and gas production remained under pressure in May 2026, with gas output declining 3.2% week-on-week to 3,028 mmcfd, while oil production fell 1.9% to 70,215 barrels per day.
Power generation declined 10% year-on-year to 9,499 GWh in April 2026, although power distribution companies requested a fuel cost adjustment (FCA) of Rs1.72 per unit due to higher fuel-based generation costs.
Pakistan’s foreign exchange reserves, however, increased sharply during the week. Official reserves held by the State Bank of Pakistan rose to $17.1 billion from $15.9 billion following inflows from the International Monetary Fund.
The Pakistani rupee remained largely stable, closing at 278.52 against the US dollar compared with 278.61 a week earlier.
Outlook
Analysts expect trading activity at the PSX to remain subdued in the coming week due to the Eid holidays and cautious investor positioning ahead of the FY27 federal budget announcement.
The KSE-100 Index is currently trading at a price-to-earnings ratio of 7.8x and offers an estimated dividend yield of around 6.4%.
