The capital market began the week on a sluggish note as global instability and trade tensions dampened investor sentiment.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index initially rose by 365.07 points (0.32%), reaching a high of 114,620.79. However, it later retreated, dropping to a low of 112,914.5. This represented a decline of 1,341.22 points, or -1.17%, from the previous session’s close of 114,255.72.
External Pressures Impact Market
Market analysts attribute the decline to global external factors. Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company, linked the drop to “the fall in international markets due to tariffs.”
The global market faced further uncertainty after US President Donald Trump imposed sweeping tariffs on China, Canada, and Mexico. This raised fears of a full-scale trade war. The affected nations have promised retaliatory measures, creating additional turmoil in financial markets.
Global Concerns Heighten
The tariffs have sparked concerns that trade wars could hurt corporate profits, trigger inflationary pressures, and delay anticipated interest rate cuts in the US. The global financial landscape took another hit when China introduced its DeepSeek AI model, leading to a significant sell-off in tech stocks. The combination of trade disputes and technological disruptions increased volatility in equity markets worldwide.
Investors have adopted a cautious approach, waiting to assess how these factors will impact financial growth moving forward.
Government’s Energy Sector Plan
Meanwhile, the government is taking steps to stabilize the energy sector. A new plan aims to reduce electricity tariffs by converting circular debt (CD) into public debt. This move is expected to lower electricity tariffs by Rs3.37 per unit and restructure $16.26 billion in energy-related debt.
The government’s plan involves refinancing and extending the repayment tenure of loans for energy projects, including hydel, coal, wind, solar, and nuclear power plants. The goal is to ease the financial burden on consumers while making the energy sector more sustainable.
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Circular Debt Reprofiling
A crucial part of the plan is reprofiling circular debt and converting it into sovereign debt. Estimates suggest this transition will result in a Rs3.78 per kWh reduction in electricity tariffs after tax. This initiative is aimed at ensuring long-term financial stability within the energy sector.
Investor Optimism on KSE-100
Despite the global challenges, the KSE-100 Index showed resilience by climbing for a second consecutive session on Friday. Strong corporate earnings expectations and hopes for further monetary easing drove investor optimism.
KSE-100 Surges on Positive Sentiment
Aggressive buying led the KSE-100 Index to rise by 1,049.32 points, or 0.93%, closing at 114,255.72. The index reached an intraday high of 115,106.99, reflecting continued investor confidence. The lowest recorded level during the session was 113,692.87.
Investors remain hopeful that corporate earnings will remain strong and that monetary policy adjustments will provide further support to the market. However, the global economic uncertainty continues to weigh heavily on overall market sentiment.
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