PSX soars on Saudi-Pak defence deal
- Index witnessed bullish momentum, recording PKR87.4bn turnover amid rising investor optimism
Pakistan Stock Exchange (PSX) witnessed bullish momentum throughout the week, fueled by investors’ confidence following the historic defence agreement between Saudi Arabia and Pakistan. This optimism was reflected in the PSX achieving its highest-ever traded value of PKR87.4 billion in the last trading session.
Market participation grew by 43.4%WoW with average daily traded volume rising to 1.8 billion shares, from 1.3 billion shares a week ago, marking second highest average weekly traded volume till date.
State Bank of Pakistan (SBP) left policy rate unchanged at 11% at Monday’s Monetary Policy Committee (MPC) meeting, taking cautious approach given recent floods.
Current Account Deficit (CAD) for August 2025 widened to US$245 million from US$82 million for the same period last year.
IT exports rose to US$337 million, up 13%YoY, but FDI declined by 43%YoY to US$156 million.
Power sector generation for August 2025 was reported at 14,218GWh, up 8%YoY, with the cost of generation declining by 18%YoY, offering some relief on the energy front.
Other major news flow during the week included: 1) Pakistan’s dollar bonds jump to four year high, 2) IMF to be convinced to slash FBR’s envisaged target, 3) Shehbaz-Trump meeting likely on September 25, 2025, 4) Pak, Turkiye to boost ICT cooperation, and 5) Pak-Iran trade reaches US$3 billion.
Property, Technology & Communication, Closed-end Mutual funds, Modarbas and Refinery were amongst the top performing sectors, while Vanaspati & Allied Industries, Leasing Companies, Textile Spinning, Miscellaneous and Engineering were the laggards.
Major selling was recorded by Foreigners with a net sell of US$20.8 million. Mutual Funds and Insurance Companies absorbed most of the selling with a net buy of US$24.0 million.
Top performing scrips of the week were: BOP, TRG, CNERGY, YOUW, and PIBTL, while laggards included: PKGP, ISL, KAPCO, and MEHT.
According to AKD Securities, PSX is expected to remain positive in the coming weeks, with the upcoming IMF review and any developments over circular debt 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, LUCK, DGKC, FCCL, INDU, and SYS.
The State Bank of Pakistan announced its monetary policy statement leaving the policy rate unchanged at 11.0%. After the announcement, the SBP Governor made the following remarks in the analyst briefing:
The decision was made in the wake of relatively moderate inflation, where core inflation continues to decline and economic activity has gained further momentum as indicated by high-frequency indicators. However, the near term economic outlook has slightly deteriorated due to the ongoing floods.
This temporary yet significant flood-induced supply shock, particularly to crops, may push up inflation and the current account deficit from earlier projections in FY26.
Growth is expected to remain moderate compared to previous estimates. Taking the above developments into account, the SBP projects FY26 growth to remain within the range of 3.25% to 4.25%.
Given the stable macroeconomic environment — supported by lower inflation, growing domestic demand, and declining international commodity prices — the excessive shocks to inflation and external accounts witnessed after previous floods are expected to remain in check this time.
Flood-related damage to crops is projected to further widen the trade deficit, though this is likely to be partly offset by Pakistan’s improved market access to the US.
The SBP expects the current account deficit to remain within the range of 0–1% of GDP during FY26.
The need to continue the ongoing prudent monetary and fiscal policy mix to sustain macroeconomic stability was emphasized.
Remittances could surpass the earlier estimate of US$40 billion, as these have remained resilient and may increase further, as observed during previous episodes of natural disasters.
The GoP is expected to meet external obligations totaling US$26.1 billion in FY26, similar to FY25. Of this, around US$22 billion represents principal repayments, while the remainder comprises interest payments. So far, the government has settled US$3.5 billion, of which US$1.5 billion were repayments and US$2.0 billion were rollovers.
Based on the expected realization of planned official inflows, the SBP’s foreign exchange reserves are projected to rise to US$15.5 billion by end December 2025.
The SBP will soon introduce a scheme to facilitate borrowers affected by floods under the World Bank’s Climate Fund Facility.
Pakistan Petroleum (PPL) reported 4QFY25 financial results, with consolidated earnings at PKR18.1 billion for the final quarter (EPS: PKR6.65), up 1%YoY. Alongside the results, the company also announced a final cash dividend of PKR2.5/ share, taking FY25 cash payout to PKR7.5/ share as compared to PKR6.0/ share for FY24.
Net Sales were reported at PKR52.4 billion for 4QFY25, down 19%YoY, largely led by reduced hydrocarbon production alongside lower average oil prices.
Regarding hydrocarbon production, PPL’s oil and gas output during 4QFY25 declined to 9,500 bpd of oil and 423mmcfd of gas.
Operating expenses for the quarter amounted PKR13.5 billion, marking a 22%YoY decline. Additionally, exploration expenses totaled PKR5.7 billion for 4QFY25, up 24%YoY.
Other income was reported at PKR4.7 billion, down 16%YoY. The decline is possibly due to lower investment yields alongside reduced cash and short-term investment balances during the outgoing quarter amounting to PKR85 billion during 4QFY25, down 27%YoY, as company chose to retire outstanding working capital liabilities during the period.
The sharp decline in trade payables may be related to the payment of the lease extension bonus on Sui D&PL during the period.
Effective tax rate for 4QFY25 came to 33%, taking full-year ETR to 34% for FY25.
For the full year, company’s earnings cumulated to PKR90 billion (EPS: PKR 33.06), down by 22%YoY. The decline in profitability was due to: 1) lower hydrocarbon production due to supply curtailments, and 2) lower oil and wellhead prices.