KARACHI:
Pakistan’s equity market closed the week ended on December 26, 2025 on a strong footing, as the benchmark KSE-100 index gained 0.58% on a week-on-week basis, extending its record-breaking run amid a convergence of positive macroeconomic and policy developments.
Investor sentiment was underpinned by the successful privatisation of Pakistan International Airlines (PIA), sold to a consortium led by AHCL for Rs135 billion, marking the country’s first major divestment in nearly two decades and a key milestone under the IMF programme.
The market also drew support from the State Bank of Pakistan’s decision to cut the policy rate by 50 basis points to 10.5% in the previous week, which helped revive risk appetite and reinforced expectations of further easing as inflation moderates.
Fixed-income indicators echoed improving sentiment, with strong participation in treasury bill auctions and yields declining sharply across tenors, reflecting ample liquidity and easing inflation expectations.
External financing flows further strengthened the outlook as multilateral lenders, including the World Bank and the Asian Development Bank, approved fresh funding to support macroeconomic stability and development initiatives.
Meanwhile, improving private sector credit growth and progress on structural reforms, including plans to auction 5G spectrum early next year, added to optimism, keeping equities in focus despite a moderation in trading volumes.
On a day-on-day basis, the PSX started the week with a lacklustre session as the KSE-100 index remained range bound and closed at 171,204, down 200 points (-0.12%).
The market witnessed another range-bound session on Tuesday, where the index closed nearly flat at 171,074, down 130 points (-0.08%). The bourse registered a third range-bound session on Wednesday, which closed at 170,830, down 246 points (-0.14%).
However, a positive session was observed on Friday as the index gained to close at an all-time high of 172,400, up 0.92%.
Topline’s weekly review noted that the KSE-100 index increased 0.58% on a WoW basis. This gain can be accredited to the successful privatisation of PIA at a value of Rs135 billion ($480 million) – one of the largest privatisation deals in the history of Pakistan.
Apart from that, the cut in the policy rate by 50 basis points to 10.5% continued to garner investor interest in the market. In other major event during the week, the government raised Rs883 billion in the T-bill auction against a target of Rs600 billion and maturity of Rs471 billion, where yields declined in the range of 36 to 72 basis points.
At the PSX, average daily traded volumes and value during the week stood at 736 million shares and Rs31.5 billion, respectively, Topline said. Syed Danyal Hussain of JS Global noted that the KSE-100 index extended its record run, closing the week at 172,400, up 0.6% WoW, although average daily turnover fell 25%.
Sentiment was supported by a key privatisation breakthrough, where the government sold a 75% stake in PIA to a consortium, led by AHCL, for Rs135 billion. The deal marks the first major privatisation in two decades and meets an important benchmark under the IMF programme, he said.
External financing momentum also remained firm, with the World Bank approving $700 million to support macroeconomic stability, while the Asian Development Bank signed two financing initiatives totalling $730 million. Cumulatively, Pakistan received foreign assistance of around $3 billion during 5MFY26.
In an encouraging development, the Pakistan Banks Association (PBA) revealed that private sector lending in FY26 to date reached Rs1.5 trillion, leading to increased liquidity. In the latest T-bill auction, the government raised Rs911 billion against a target of Rs471 billion, with yields falling 36-78 basis points across tenors.
In another development, the Economic Coordination Committee (ECC) approved plans to auction 5G spectrum by the end of January 2026 or early February 2026. Lastly, the State Bank’s foreign exchange reserves edged up by $16 million to $15.9 billion, Hussain said.
