Karachi, April 12, 2025 – Investors at the Pakistan Stock Exchange (PSX) are preparing for another potentially volatile week, as global geopolitical developments and the onset of the corporate earnings season are poised to steer market direction. With economic anxiety escalating globally and investor sentiment remaining fragile, participants are treading cautiously while keeping a close eye on both external and domestic market cues.
The primary concern among investors stems from the recent imposition of tariffs by former U.S. President Donald Trump, a move that has sent ripples across international markets. While these tariffs have raised alarms across global exchanges, their impact is being closely monitored at the PSX, where investors are attempting to gauge the broader implications for trade flows, capital markets, and commodity-linked sectors.
Adding to the uncertainty, the United States has temporarily paused the enforcement of reciprocal tariffs for all countries except China, allowing a 90-day window of relative relief. Market analysts at Arif Habib Limited suggest that this suspension, combined with a cooling trend in global commodity prices, could provide short-term support to the PSX and offer investors some breathing space. Nevertheless, the situation remains fluid, with the potential for abrupt shifts depending on evolving U.S.-China trade dynamics.
In parallel, the PSX is entering corporate earnings season—an event that traditionally serves as a bellwether for market sentiment. As listed companies begin reporting quarterly results, investor attention is likely to shift toward performance-driven stock picking. Sectors and companies that post strong financials may see a surge in trading volumes, while underperformers could face renewed selling pressure. Historically, earnings announcements have acted as short-term catalysts for price movement, creating both risks and opportunities for market participants.
Despite the prevailing caution, the KSE-100 index—the PSX’s benchmark—is presenting a compelling valuation for long-term investors. Trading at a price-to-earnings ratio (PER) of 6.2x for 2025, well below its 10-year average of 8.0x, and offering a healthy dividend yield of 8.3%—compared to the historical average of 6.5%—the index appears attractive to value-focused investors. Analysts believe this valuation gap may draw attention from bargain hunters during earnings season.
Last week’s market activity painted a picture of volatility and cautious optimism. The KSE-100 index experienced a dramatic single-day drop of 8,688 points (-7.3%), driven largely by panic over the new tariffs. However, a partial recovery followed after Trump’s announcement of a temporary pause on duties exceeding 10%, alongside positive local developments such as the international mineral mining conference and resource discoveries in Balochistan.
Sector-wise, performance remained mixed. Declines in banking, fertilizer, exploration & production (E&P), technology, and power sectors weighed on the index. However, gains in cement, pharmaceuticals, and automobile assemblers provided some counterbalance. Foreign investors remained net sellers, registering USD 9.9 million in outflows, while local mutual funds and retail investors also showed a tendency to offload positions amid heightened uncertainty.
As trading resumes in the upcoming week, investors at the PSX are likely to adopt a cautious but opportunistic approach—closely watching global trade policy shifts and domestic earnings announcements. With market volatility expected to persist, those with a focus on fundamentals and value investing may find selective opportunities amidst the noise.