KARACHI: Pakistan’s equity market has emerged as one of the weakest globally in early 2026, weighed down by rising inflation and intensifying geopolitical tensions, according to a report by Topline Securities Ltd.
Data showed that the benchmark KSE-100 Index posted a negative return of 14.6% in US dollar terms during 3QFY26, placing Pakistan among the bottom three performing markets worldwide.
Other regional markets also struggled, with India and Indonesia recording even steeper declines of 19.4% and 19%, respectively. In contrast, frontier markets such as Ghana, Oman, and Nigeria led global performance, delivering returns of 43.6%, 42.3%, and 34.1%.
Analysts attributed Pakistan’s weak market performance primarily to external geopolitical risks, particularly tensions involving Iran, Israel, and the United States, which have dampened investor sentiment across the region.
At the domestic level, rising inflation and surging global energy prices further eroded market confidence, highlighting the vulnerability of the Pakistan Stock Exchange to macroeconomic instability. This marks a sharp reversal from last year, when Pakistan ranked among the top-performing markets globally.
During the outgoing week, the KSE-100 Index remained volatile, closing at 150,399 points — down 0.9% week-on-week, reflecting a loss of 1,309 points amid continued selling pressure.
Market sentiment was further impacted by the government’s decision to withdraw fuel subsidies, resulting in a 55% increase in diesel prices and a 43% rise in petrol prices. However, in a bid to provide temporary relief, Prime Minister Shehbaz Sharif later announced a reduction in the petroleum levy on petrol by Rs80 per litre for one month.
Analysts believe that while the short-term relief may ease pressure, sustained stability in the market will depend on managing inflation, ensuring policy consistency, and reducing exposure to external economic shocks.
