PSX index hits record, up 2.0%wow
- Market strength stemmed from corporate earnings, Moody’s upgrade
Pakistan Stock Exchange (PSX) was supported by strong corporate earnings and Moody’s upgrade of deposit ratings for Pakistani banks, while demonstrating weakness later on in the week due to political noise. The benchmark index touched an all-time high of 151,262 points, but closed the week at 149,493 points, up 2.0%WoW.
Market participation rose 31%WoW to 790 million shares, from 606 million shares a week ago.
On the macroeconomic front, Pakistan posted a current account deficit of US$254 million as compared to a deficit of US$348 million during the same period last year.
IT exports for July 2025 increased by 24%YoY to US$354 million, from US$286 million during the same period last year.
LSM index witnessed an increase of 4.1%YoY in June 2025, resulting in FY25 declining by 0.7%YoY.
As regards sectoral developments, urea fertilizer offtakes moderated by 1%YoY during July 2025, mainly due to weak farm economics and higher phosphate prices.
Foreign exchange reserves held by State Bank of Pakistan (SBP) increased by US$13 million to US$14.3 billion as of August 15, 2025. As a result, PKR appreciated for the 5th consecutive week against the greenback.
Other major news inflows during the week included: 1) ADB to promises to provide US$410 million package for Reko Diq copper and gold mines, 2) Chinese Foreign Minister, Wang Yi arrives in Islamabad on three-day visit, 3) July 2025 FDI rises 7%YoY to US$208 million, 4) Tehran agrees raising trade with Pakistan to US$10 billion, and 5) GoP slashes high-speed diesel while leaving petrol price unchanged.
REITs, Leather & Tanneries, and Transport were amongst the top performing sectors, while Vanaspati & allied industries, Close-end Mutual funds, and Chemical sectors among the laggards.
Major selling was recorded by Foreigners and Banks/DFIs with a net sell of US$21.6 million. Mutual Funds and Companies absorbed most of the selling with a net buy of US$24.7 million.
Top performing scrips of the week were: KOHC, SEARL, BAHL, THALL, and MUGHAL, while the laggards included: PGLC, PKGP, HUMNL, YOUW, and NESTLE.
According to Pakistan’s leading brokerage house, PSX is expected to remain positive in the coming weeks, with further developments over circular debt expected to drive the market along with upcoming corporate results remaining in the limelight.
The benchmark index is anticipated to sustain its upward trajectory, with a target of 165,215 points by end December 2025, primarily driven by strong earnings in Fertilizers, sustained ROEs in Banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability.
Top picks of the brokerage house include: OGDC, PPL, PSO, FFC, ENGROH, MCB, FCCL, INDU, and SYS.
Power generation in July 2025 was reported at 14,123GWh, down 5%YoY but up 3%MoM, continuing the seasonal momentum from June. Higher temperatures and peak summer demand fueled this recovery, with July recording the highest monthly output in FY25, surpassing June generation.
Hydel remained the dominant source in the energy mix for July 2025, contributing 39% of generation. Output rose to 5,668GWh, up 5%MoM and 6%YoY, supported by steady water flows during the peak summer season.
However, coal-based generation declined 9%MoM to 2,643GWh as both local and imported coal plants reduced dispatches from June’s elevated levels, YoY generation stayed flat.
Among other thermal sources, RLNG-based output increased 10%MoM on improved fuel supply; nevertheless, it was still 18% lower YoY due to weaker offtake.
Moreover, gas-based generation also picked up 13%MoM, partly offsetting the decline in RLNG, while furnace oil use fell 28%MoM to 108GWh, remaining insignificant in the overall mix.
Meanwhile, nuclear generation remained stable on a monthly basis, edging up 2%MoM to 1,405GWh, though YoY volumes dropped 29% which could be due to plant availability issues. Furthermore, renewable generation provided some support, as wind output rose 13%MoM and 33%YoY to 592GWh, while solar contribution remained largely flat.
Grid-based demand has seen a steady rise, backed by seasonal consumption and tariff adjustments, improving plant load factors in the short run. Still, persistent structural challenges—most notably the accelerating shift toward solar in both residential and commercial segments—pose risks to grid demand, DISCO viability, and long-term capacity management.
The average fuel cost of power generation in July 2025 eased to PKR 7.8/kWh, down 1%MoM and 13%YoY. The YoY decline primarily reflects lower RLNG and gas prices alongside a higher share of hydel and wind generation. On a month-on-month basis, the marginal drop occurred despite increased output from coal plants and stable nuclear generation, which kept the overall cost nearly flat.
Pakistan has finalized term sheets with 18 banks for a PKR 1.275 trillion Islamic finance facility, structured at 3-month KIBOR minus 0.90% with six-year repayment. However, disbursement faces hurdles due to unresolved dues of Chinese CPEC IPPs, owed PKR475 billion—primarily Huaneng Shandong Ruyi (PKR87 billion), Port Qasim Electric (PKR85 billion), and China Power Hub (PKR70.4 billion). Of this, PKR15.7 billion relates to EPP, PKR230 billion to capacity repayments, and PKR177.7 billion to interest.
Unlike local IPPs, Chinese firms have refused to waive LPS or accept revised PPAs, stalling progress on circular debt resolution.
Pakistan’s circular debt in the power sector fell to PKR1.6 trillion by June 2025, down 33%YoY from PKR2.4 trillion, driven by PKR801 billion disbursements under the Government’s clearance plan.
Payables to IPPs dropped to PKR861 billion as against PKR1.6 trillion), GENCOs’ dues to fuel suppliers declined 16% to PKR93 billion, while Power Holding Limited debt eased 3% to PKR660 billion.
Adjustments, including prior-year settlements, reduced debt by PKR358 billion, though DISCO inefficiencies added PKR265 billion and under-recoveries PKR132 billion, still a notable improvement from PKR315 billion last year.