Karachi, September 27, 2025 – The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) posted an impressive gain of 2.67% on a week-on-week basis, ending the week at a historic all-time high. Market participants celebrated the rally, pointing to improved investor confidence and optimism about Pakistan’s economic outlook.
According to analysts at Arif Habib Limited, the surge in the KSE-100 index was strongly linked to political and economic developments during the week. The highlight was Prime Minister Shehbaz Sharif’s meeting with U.S. President Joe Biden at the White House on September 25. Discussions on bilateral ties, international cooperation, and economic collaboration boosted investor sentiment. This meeting followed a high-profile U.S. delegation visit to Pakistan, during which several memorandums of understanding (MoUs) were signed in the mining and infrastructure sectors, particularly focusing on rare earth elements and critical minerals.
Another major driver of the bullish momentum was the resolution of the power sector’s circular debt crisis. On September 24, the government finalized an agreement for a PKR 1.225 trillion loan at KIBOR minus 0.9%. This deal, aimed at reducing the power sector burden, is expected to ease liquidity constraints and improve overall financial stability. Notably, circular debt had already declined from PKR 2.3 trillion in July 2024 to PKR 1.6 trillion by July 2025, marking significant progress.
On the macroeconomic front, Pakistan’s foreign exchange reserves edged up to USD 19.79 billion, including USD 14.38 billion held by the State Bank of Pakistan. A modest strengthening of the Pakistani rupee was also recorded, appreciating by 0.03% week-on-week to close at 281.37 against the U.S. dollar.
Energy production trends offered additional support to market optimism. Oil production climbed 2.7% week-on-week, reaching 64,313 barrels per day, while gas output rose 2.8%, reaching 2,812 million cubic feet per day. Increased contributions from key fields such as Sui, Makori East, and Kandhkot offset declines elsewhere.
Meanwhile, trade data showed a 16.3% year-on-year drop in crude imports by volume during August 2025, though imports of petroleum products increased 3.8% in the same period. Lower global oil prices provided relief on the import bill, strengthening Pakistan’s external account position.
Analysts note that the KSE-100 index now trades at a forward price-to-earnings ratio (PER) of 8.52x for 2026, compared to a 15-year average of 8.59x. With a healthy dividend yield of around 6.2%, slightly above its historical average, the index continues to offer attractive returns.
Market observers believe that if debt payments are disbursed on time, the KSE-100 may sustain its upward trajectory in the coming weeks, keeping sentiment positive across the trading floor.