Basit Ali

Stability in the Middle East has boosted investor confidence in the Pakistan Stock Exchange (PSX), supporting a broad rally across sectors. Experts link the momentum to lower oil prices, rising remittances, and easing inflation, but warn that any fresh regional tensions could reverse gains.

Talking to WealthPK, Muhammad Atif Khan, Director of Zahid Latif Khan Securities (Pvt) Ltd, said the ongoing calm in the Middle East is proving beneficial for the global markets, including Pakistan. “The PSX is witnessing a strong bull run, supported by improving macroeconomic indicators, government-backed investor confidence, and now regional stability,” he said.

He pointed out that the stable oil prices resulting from Middle East calm are particularly vital for Pakistan due to its heavy reliance on imported energy. “Lower oil prices ease inflation, support the rupee, and improve trade balance, all of which drive investor confidence,” he added. Atif also noted that the regional peace supports higher remittance inflows from the Gulf, which inject liquidity into the local markets and further boost the PSX activity.

“Millions of Pakistanis work in the Gulf. When the region is stable, job markets are secure and remittances grow. These inflows strengthen the economy and support market liquidity.” However, he cautioned that the region has a history of sudden escalations. “If tensions re-emerge, oil prices may spike, remittances could decline, and inflation may rise, all of which could undermine the market sentiment,” he warned.

“Sectors like energy, cement, and large-scale manufacturing would be among the hardest hit, especially since these industries are already under cost pressure.” He further explained that many Pakistani businesses depend heavily on imported raw materials. “Any disruption in maritime routes due to conflict would interrupt supply chains, disrupt production, and damage investor sentiment. That’s why geopolitical peace matters far beyond oil prices alone.”

Concluding, he said while the current rally is promising, a risk-aware approach is essential. Pakistan’s economy remains vulnerable to global shocks. Investors must maintain a diversified strategy and keep a close eye on regional developments.” Meanwhile, Waqas Ghani, CFA, Head of Equity Research and Senior Vice President of JS Global Capital, said investors have reacted positively to the Middle East ceasefire and falling oil prices.

“Broad-based buying is being seen across sectors, led by the banking stocks. Improving macro fundamentals and lower inflation are supporting overall investor confidence,” he noted. He added that while the momentum is likely to continue in the short term, cyclical stocks are expected to benefit the most. “However, any fresh geopolitical uncertainty could reverse this momentum and weigh on the market outlook,” he cautioned.

Credit: INP-WealthPk