PSX benchmark index down 0.70%WoW

Pakistan Stock Exchange (PSX) remained volatile throughout the week, amid persistent Middle East military conflict driving volatility in international oil prices. The benchmark index lost 1,126 points or 0.7% during the week to close at 152,740 on Thursday, March 19, 2026, the last trading day before Eid Holidays.

Market participation remained lackluster during the week, with average daily traded volume declining to 418 million shares, from 548 million shares in the prior week. Developments on the economic front remained encouraging, as the country posted Current Account surplus of US$427 million in February 2026, against a deficit of US$85 million during the same period last year, primarily driven by higher workers’ remittances.

Industrial activity (LSMI) expanded by 10.5%YoY in January 2026, led by growth in the automobile and textile sectors.

Power generation increased by 11%YoY in February 2026, supported by lower tariffs and a shift of industrial consumers towards national grid.

Urea offtakes declined by 28%YoY during February 2026 due to elevated channel inventory following advance procurement in December 2025. offtakes rose 2.5x YoY over the same period.

T-Bill yields rose by 51 to 100bps in the first auction following SBP decision to leave policy rate unchanged.

Other major news flow during the week included: 1) Pakistan secures alternative fuel supply from Gulf amid regional tensions, 2) ADB unveils US$10 billion financing strategy for Pakistan, 3) IT exports rise 20%YoY to US$365 million, 4) REER drops to 102.5 in February 2026, and 5) GoP considering to hold fuel price till 31st March, 2026.

Woollen, Synthetic & Rayon and Close-End Mutual Fund were amongst the top performing sectors, while Leather & Tanneries, Commercial Banks and Miscellaneous were amongst the laggards.

Major selling was recorded by Foreigners and Mutual Funds with a net sell of US$9.3 million and US$4.5 million, respectively.

Banks and Individuals absorbed most of the selling with a net buy of US$10.3million and US$7.4 million, respectively.

Top performing scrips of the week were: PKGP, ABOT, IBFL, BNWM, and KOHC, while laggards included: NBP, AICL, PABC, UNITY, and SRVI.

Going forward, AKD Believes market sentiment will hinge on the developments in the Middle East conflict. At the same time, investor focus will remain on the government’s energy conservation measures, diversification of fuel imports, and progress on the IMF review.

Over the medium term, any de -escalation in the conflict could spark a strong market rebound, as recent corrections have made valuations attractive.

Top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

Targets by Choice: They Can’t Have It Both Ways

The escalating confrontation between the United States fully supported Israel against Iran has exposed a fundamental contradiction in the posture of Arab Gulf states. Governments hosting US military bases have condemned Iranian strikes on these installations as violations of sovereignty. Yet this claim collapses under the weight of their own strategic choices.

US bases in the Gulf are not passive or symbolic presences. They are active components of a broader military architecture directed against Iran. These facilities support operations ranging from intelligence gathering to force projection. In any conflict, such installations are not neutral—they are legitimate military targets.

Iran’s response must be understood within this context. Lacking the capacity to strike the US mainland, Tehran has chosen to target the physical infrastructure through which US power is exercised in the region. This includes bases located in Saudi Arabia, United Arab Emirates, and Qatar. These locations are not incidental; they are central to the operational reach of the United States in the Gulf.

The assertion that such strikes amount to attacks on Arab states themselves is misleading. These bases, while geographically situated within sovereign territory, function as extensions of US military capability. Targeting them is not an assault on the host nation in the conventional sense, but a calculated effort to degrade an adversary’s war-making capacity.

More importantly, the argument of violated sovereignty overlooks a prior reality: sovereignty was effectively diluted when these states permitted foreign military infrastructure on their soil. Hosting bases that are actively engaged in conflict is not a neutral act—it is a strategic alignment. That alignment carries consequences.

The current situation is therefore not an unexpected escalation, but a predictable outcome. By embedding themselves within the operational framework of US military strategy, these states have assumed the risks associated with it. Their territories have, in effect, become extensions of a conflict in which they claim no direct role.

Protesting Iranian retaliation while continuing to host these bases reflects a fundamental inconsistency. It suggests an attempt to benefit from security arrangements without accepting the vulnerabilities they create. In geopolitical terms, this is not a sustainable position.

If these states seek genuine insulation from regional conflict, the solution is neither diplomatic protest nor rhetorical positioning. It is structural. Removing foreign military bases would reduce their exposure and reassert control over their own security environment. Anything less leaves them entangled in a conflict they cannot fully control, yet cannot credibly distance themselves from.

The reality is stark. By hosting US military infrastructure, these states have made themselves part of the battlefield. What they face today is not an unjust imposition, but the direct consequence of deliberate policy choices.

Why Is Washington Pursuing a War It Cannot Win?

Plans to seize Iran’s strategic assets risk triggering a wider conflict that could spiral beyond American control

Washington is no longer debating whether to escalate its conflict with Iran—it is moving steadily toward a war it cannot win. The real question is not capability, but judgment: why pursue a course whose consequences are both predictable and uncontrollable?

Deliberations within the administration of Donald Trump over deploying ground forces—whether to secure Kharg Island or to take control of Iran’s enriched uranium stockpiles—reflect a dangerous misreading of both history and reality.

Such objectives may appear decisive in military briefings, but they are strategically unsound. Airstrikes and targeted operations create an illusion of dominance; they do not translate into sustainable control. The moment U.S. troops set foot on Iranian soil, the conflict will cease to be limited. It will become a full-scale national resistance.

Iran is not comparable to past theaters like Libya or Afghanistan, where fragmented internal dynamics shaped outcomes. It is a cohesive state with deep-rooted national identity and an established capacity for asymmetric warfare. There will be no local cooperation—only organized, ideological resistance.

History has already delivered a clear warning. The failure of Operation Eagle Claw was not merely operational; it exposed the limits of American power in unfamiliar terrain. It is telling that successive U.S. administrations, despite sustained hostility, avoided direct military engagement inside Iran.

Equally flawed is the belief that eliminating leadership structures weakens Tehran. It does the opposite. Each strike reinforces a narrative of resistance, radicalizes the population, and strengthens long-term resolve against U.S. presence in the region.

Even the objective of securing the Strait of Hormuz cannot justify such escalation. A ground presence in Iran would invite retaliation across multiple fronts—military, economic, and geopolitical—far beyond Washington’s ability to contain.

The United States must confront a fundamental reality: overwhelming power does not guarantee strategic success. Entering Iran militarily would not demonstrate strength—it would expose vulnerability. The wiser course is not escalation, but restraint—because once this line is crossed, there may be no way back.

Washington’s Miscalculation: War It Can't Win

Since the Iranian Revolution, the United States has pursued not coexistence with Iran, but its submission. Nearly five decades of sanctions, covert operations, and proxy confrontations have produced a results Washington resists admitting - Iran has not weakened — it has adapted, and in many respects, hardened.

This is not an isolated miscalculation. From Iraq to Libya, the assumption that external force can re-engineer political systems has repeatedly collapsed. Iran is proving no exception, exposing once again the limits of military and economic coercion as instruments of political change.

The effort to portray Iran as the region’s central threat—overshadowing Israel—has long served as the foundation of US policy in the Gulf. It justified massive arms sales, entrenched military bases, and culminated in the Abraham Accords. What was presented as a pathway to stability now appears increasingly as a framework of managed dependency.

That framework is beginning to fracture. The devastation in Gaza has reshaped public opinion across the Arab world, exposing the disconnect between state policy and societal sentiment. Governments that once moved toward normalization now find themselves under growing domestic pressure to reassess those alignments.

The latest confrontation has further dismantled the illusion of quick victories. Even the assassination of Ali Khamenei — an act calculated to destabilize Iran’s leadership — has failed to produce systemic collapse. Instead, it has reinforced internal cohesion, underscoring a consistent lesson - external aggression often strengthens, rather than weakens, entrenched systems.

Meanwhile, the economic consequences are no longer theoretical. Disruptions in the Strait of Hormuz have constrained oil flows, placing Gulf economies under mounting strain. The reluctance of European allies to engage militarily signals a quiet but significant lack of confidence in both the strategy and its endgame.

What is unfolding is not a temporary crisis but a structural failure of policy. The belief that Iran can be coerced into submission—or reshaped through force—rests less on evidence and more on the persistence of outdated assumptions.

This war is not merely unwinnable; it is strategically irrational. It undermines regional stability, weakens alliances, and imposes escalating economic costs on those it claims to protect.

The question is no longer whether this approach will fail, but how much damage will be inflicted before it is finally abandoned.

A War Without Allies: Trump’s Iran Gamble

The escalating confrontation between the United States and Iran is exposing an uncomfortable geopolitical reality for President Donald Trump - the war he initiated is attracting few allies. Despite Washington’s overwhelming military power and close coordination with Benjamin Netanyahu’s Israel, the conflict has so far failed to generate the kind of international coalition that has historically accompanied major US military campaigns.

At the center of the crisis lies the disruption of shipping through the vital Strait of Hormuz, the narrow waterway through which nearly one-fifth of the world’s oil supply normally passes. Iran’s response to US and Israeli strikes has been calculated and asymmetric. Rather than confronting American forces directly, Tehran has leveraged geography and targeted regional oil interests, pushing global energy prices higher and unsettling markets worldwide.

This escalation has created a difficult dilemma for Washington. While the United States may possess unmatched military capabilities, restoring stability in such a sensitive maritime corridor ideally requires international cooperation. Yet when the Trump administration sought support from its traditional partners, the response from Europe ranged from cautious hesitation to outright refusal.

European capitals appear determined to avoid being drawn into a conflict they neither initiated nor fully support. In Britain, Prime Minister Keir Starmer faces the prospect of significant domestic backlash if London becomes directly involved. German leaders have been even more explicit. Defense Minister Boris Pistorius bluntly stated that the conflict “is not our war,” while Chancellor Friedrich Merz ruled out German military involvement. Similarly, European Union foreign policy chief Kaja Kallas acknowledged that there is little appetite among EU member states to expand naval missions into the Gulf.

Part of this reluctance reflects a deeper diplomatic context. For years, Trump has openly criticized NATO allies and questioned the value of longstanding partnerships. Having spent considerable political capital challenging allied governments, Washington now finds that calls for solidarity are being met with caution.

Another factor shaping global perceptions is the widespread belief that Israel’s security calculations played a major role in pushing the United States toward confrontation with Iran. While Israeli and American strikes may inflict significant damage on Iranian capabilities, few analysts believe they can easily force Tehran into submission.

For now, the war looks less like a Western coalition and more like a strategic gamble by Washington and Tel Aviv. The hesitation of allies underscores a simple lesson of geopolitics - wars launched without consensus rarely attract coalitions afterward.

Unlocking The Strait of Hormuz Requires Diplomacy, Not Escalation

The latest confrontation in the Gulf has pushed the region into one of its most dangerous moments in recent decades. The joint military assault by the United States and Israel on Iran—reportedly carried out while negotiations on Tehran’s nuclear program were still underway—has dramatically escalated tensions. Matters deteriorated further after the killing of Iran’s Supreme Leader, Ali Khamenei, an event Tehran considers an unprecedented attack on its sovereignty and political system.

Iran’s retaliation was swift and calculated. It launched strikes against American military installations located in neighboring Arab states and moved to restrict shipping through the strategically vital Strait of Hormuz. This narrow waterway remains one of the most critical arteries of global energy trade, with a substantial portion of the world’s oil shipments passing through it every day. By tightening control over this chokepoint, Tehran has effectively reminded the world that instability in the Gulf carries immediate and significant global economic consequences.

The debate now dominating diplomatic circles is simple: how can the Strait of Hormuz be unlocked?

The answer lies less in military maneuvering and more in political realism. History repeatedly demonstrates that escalating force in the Middle East rarely produces lasting stability. Instead, it deepens mistrust and widens the scope of conflict. Continued military pressure on Iran will likely provoke further retaliation, potentially dragging the entire region into a broader confrontation.

A more pragmatic path is available. The United States and Israel should immediately halt further assaults on Iranian territory and create space for diplomatic engagement. Reviving negotiations on Iran’s nuclear program could provide the first step toward rebuilding communication channels that have now been severely damaged.

Equally important is a removal of the sanctions imposed on Iran. Immediate withdrawal of some of the sanctions could offer incentives for de-escalation while restoring confidence in the diplomatic process.

Ultimately, reopening the Strait of Hormuz will not be achieved through warships or airstrikes. It requires restraint, dialogue, and a recognition that enduring security in the Gulf can only emerge from diplomacy rather than confrontation.

War with Iran and the Question of America’s Global Power

As the United States–Israel war against Iran enters its third week, the expanding scope of the conflict is forcing the world to reassess the role of the United States in shaping the international order. What began as a military confrontation is increasingly being interpreted as part of a broader geopolitical strategy — one that echoes patterns seen in earlier American interventions.

The latest signal came when the administration of Donald Trump announced a US$10 million bounty for information on Mojtaba Khamenei, Iran’s newly elevated supreme leader. The reward, issued through Washington’s “Rewards for Justice” program, targets individuals whom the United States accuses of involvement in militant activities.

Such a move is unusual in modern diplomacy. Publicly placing a bounty on a serving leader of a sovereign state sends a strong political message and inevitably raises questions about Washington’s long-term objectives in the conflict. Critics argue that the step suggests the war may extend beyond military confrontation and could ultimately aim at weakening or reshaping Iran’s leadership.

The controversy unfolds against the backdrop of intense global criticism of Israel’s conduct in Gaza. The war there has produced devastating humanitarian consequences, with tens of thousands reported dead, many of them civilians. For much of the world, the expansion of conflict toward Iran reinforces the perception that the United States and Israel are pursuing a broader strategic agenda across the Middle East.

Historically, American interventions have frequently been framed in the language of security, democracy, or counter-terrorism. Yet several precedents are often cited by critics as examples where these interventions eventually evolved into attempts to alter political leadership. The invasion of Iraq in 2003, the NATO intervention in Libya in 2011, and sustained political pressure on governments in Venezuela are commonly referenced in this debate.

These precedents also revive a deeper question about the effectiveness of global governance institutions. The United Nations was established after the Second World War to prevent unilateral wars and protect the sovereignty of states. However, the structure of the Security Council — where the United States holds veto power — often limits the organization’s ability to act decisively when Washington itself is directly involved in a conflict.

This structural imbalance has created a persistent credibility dilemma. While the United Nations remains the central forum for international diplomacy, critics increasingly argue that its capacity to restrain the strategic ambitions of major powers remains limited.

As the war with Iran unfolds, the debate is no longer confined to the future of the Middle East alone. It now touches the credibility of the international system itself — and whether the global order is governed by collective rules or ultimately shaped by the interests of its most powerful states.