Pakistan’s benchmark KSE-100 Index gained 373 points during the week as investors weighed geopolitical risks and improving economic indicators.
KARACHI: Pakistan’s stock market posted a marginal 0.22 per cent week-on-week (WoW) gain during the week ended September 18, 2026, as geopolitical tensions and concerns over global commodity prices continued to weigh on investor sentiment.
According to market commentary released by Arif Habib Limited, the benchmark KSE-100 Index gained 373 points to close at 170,885, compared with 170,512 points in the previous week.
The market remained under pressure for most of the week amid geopolitical concerns. However, sentiment improved towards the end of the week amid expectations of diplomatic engagements ahead of the United Nations General Assembly (UNGA) session scheduled to begin on September 22, 2026.
SBP keeps policy rate unchanged
The State Bank of Pakistan’s Monetary Policy Committee (MPC) kept the policy rate unchanged at 11.5 per cent, with seven of its 10 members voting in favour of the decision.
The MPC noted that the intensifying conflict in the Middle East had pushed already elevated global commodity prices higher, while supply-chain disruptions continued to persist.
Current account deficit narrows
Pakistan recorded a current account deficit of $98 million in August 2026, substantially lower than the $324 million deficit recorded in August 2025 and the $445 million deficit in July 2026.
However, the country’s trade deficit widened during the month. According to the Pakistan Bureau of Statistics (PBS), the trade deficit increased 15.1 per cent year-on-year (YoY) to $3.3 billion in August 2026.
Exports declined 5.2 per cent YoY and 13.9 per cent month-on-month (MoM) to $2.5 billion, while imports increased 10.6 per cent YoY, despite declining 15.2 per cent MoM, to $5.8 billion.
Foreign investment and technology exports rise
Net foreign direct investment (FDI) increased 24 per cent YoY to $494 million during the first two months of FY2026-27, compared with $399 million during the corresponding period of FY2025-26.
Meanwhile, technology exports rose 17 per cent YoY to $394 million in August 2026, although they declined 6 per cent MoM. Technology exports accounted for 45 per cent of overall services exports during the month.
Auto sales and financing show mixed performance
Pakistan’s auto sector recorded mixed monthly performance during August.
Sales of cars, light commercial vehicles, vans and jeeps increased 11 per cent YoY to 15,600 units, but declined 21 per cent compared with July.
Excluding Sazgar Engineering Works Limited (SAZEW), which did not report August 2026 figures, auto sales increased 20 per cent YoY while declining 19 per cent MoM.
Auto financing also continued to expand, rising 33.8 per cent YoY to Rs393 billion in August 2026 from Rs294 billion a year earlier. On a monthly basis, auto financing increased 1.8 per cent.
Oil and gas production declines
Oil production fell 1.4 per cent WoW to 67,500 barrels per day (bopd), mainly due to lower output from the Makori East and Pasakhi fields.
Gas production also declined 2.6 per cent WoW to 3,008 million cubic feet per day (mmcfd), primarily because of reduced production from the Mari and Shewa fields.
SBP reserves reach record level
Foreign exchange reserves held by the State Bank of Pakistan increased by $3.061 billion WoW to $21.4 billion, reaching their highest-ever level following the receipt of proceeds from a Eurobond.
According to Arif Habib Limited, this was the largest weekly increase in SBP reserves since June 27, 2025.
The Pakistani rupee remained broadly stable, appreciating marginally by 0.03 per cent during the week. The currency closed at Rs277.25 per US dollar, compared with Rs277.32 in the previous week.
KSE-100 outlook
Market sentiment is expected to remain sensitive to developments surrounding the US-Iran conflict and diplomatic engagements taking place on the sidelines of the UNGA session.
According to the market commentary, the KSE-100 Index was trading at a price-to-earnings (P/E) ratio of 7.5, while the market’s dividend yield stood at 6.6 per cent.