PSX benchmark index sheds 3.23%WoW

Pakistan Stock Exchange (PSX) witnessed bearish momentum during this past week, with the benchmark Index shedding 5,520 points or 3.23%WoW to close at 166,596 on Friday, May 15, 2026. The average daily trading volume declined 6.3%WoW to 1.1 billion shares.

The key sentiment driver remained the escalating US-Iran conflict, with Brent crude hovering around US$106/ bbl throughout the week, amid blockade of Strait of Hormuz.

Trump termed Iran’s response to the US proposal “unacceptable”, though sentiments improved slightly towards the week-end after US Vice President signaled progress in talks. Pakistan’s mediation efforts drew support from both the US and China.

Pakistan received a US$1.3 billion IMF disbursement under the EFF and RSF programs following completion of the third EFF review and announcement of new performance criteria.

On the macro front, fiscal deficit narrowed to lowest ever of 0.7% of GDP or PKR856 billion in 9MFY26 as compared to 2.6% in same period last year.

Primary surplus rose 18%YoY to PKR4.1 trillion or 3.2% of GDP and petroleum levy collections increased 45%YoY to PKR1.2 trillion during 9MFY26.

In April 2026, Auto sales doubled to 22,000 units, remittances rose 11.4%YoY to US$3.5 billion, taking 10MFY26 inflows to US$33.9 billion, up 8.5%YoY

Foreign exchange reserves held by State Bank of Pakistan (SBP) edged up to US$15.87 billion as of May 08, 2026.

Provisional GDP growth was reported at 3.7% against a target of 4.2%, with per capita income increased to record high of US$1,901, economy size at US$452.1 billion, and public debt at PKR80.5 trillion as of March 2026.

Other major news flow during the week included: 1) Pakistan successfully launched its inaugural US$250 million Panda Bond in China's onshore capital market with 5x oversubscribed at the lowest ever rate of 2.5%, 2) Government aims to keep PKR425 billion in upcoming budget for unforeseen events, 3) Pakistan diverted gas to fertilizer plants amid Hormuz-related supply disruptions, while Qatari LNG cargoes continued arriving through special transit arrangements, 4) Government remains committed to abolishing PKR140 billion gas cross-subsidy by Jane 2027 under IMF structural benchmark, and 5) Pakistan imported 6 million barrels of US crude oil through Cnergyico for the first time.

Top performing sectors were: Leasing Companies, Leather & Tanneries, and Sugar & Allied Industries, while laggards included: Textile Weaving, Textile Composite, and Synthetic & Rayon.

Major selling was recorded by Mutual Funds and Companies of US$8.90 million and US$5.07 million respectively. Major net buyers were Individuals and Brokers with US$14.20 million and US$1.07 million, respectively.

Top performing scrips were: GADT, TRG, PGLC, KEL, and SRVI, while laggards included: KTML, PIOC, AICL, UBL, and FHAM.

Going forward, Iran-US negotiations and international oil price remain the key drivers in the near term, with any easing in Strait of Hormuz tensions serving as a key supportive trigger.

The recent IMF disbursement of US$1.3 billion under EFF and RSF programs, alongside Pakistan's landmark Panda Bond debut, reinforces the improving external financing outlook. Market continues to trade at attractive valuations.

The top picks of AKD Securities include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

Taiwan Most Contentious Issue in China-US Relations

This week, US President Donald Trump visited China for the first time in nearly nine years, and met with Chinese President Xi Jinping. The summit, held at the Great Hall of the People, lasted for more than two hours. While China staged a grand ceremony and both sides exchanged diplomatic pleasantries, the substance of the leaders' talks remained unclear, at least through Thursday.

Against this backdrop, major media outlets, including Nikkei Asia, have highlighted a "warning" made by Xi. According to a readout published by state news agency Xinhua, Xi told Trump that the Taiwan question is "the most important issue" in US-China ties. "If handled well, bilateral relations can maintain overall stability," Xi was quoted as saying. If "handled poorly," the two countries risk a "clash" that could push "the entire China-US relationship into a very dangerous situation."

The term "clash" is far from mild. Notably, the US readout after the meeting did not mention Taiwan. While China has sought to project this message as a "warning" to the world, the US appears to have sidestepped what Xi described as the "most important" issue in the relationship, leaving the talks sounding inconclusive.

Trump's visit to China was accompanied by prominent business leaders, including Apple CEO Tim Cook and Nvidia CEO Jensen Huang, a central figure in the AI boom, who joined the trip at the last minute. Despite bringing along some of the country's most influential executives, who also have great influence on Asia's technology supply chains, the visit has so far resulted in no notable tech business announcements.

US-China talks, which were expected to have significant global implications, appear to have ended in ambiguity. It appears that Xi, through his warning on Taiwan, delivered the headline-making message. Having said he will host Xi in the US ahead of the country's midterm elections, Trump will likely seek to claim more tangible outcomes when the second round of the summit is on his home turf.

Araghchi urges BRICS nations to condemn US-Israel aggression against Iran

Iranian foreign minister Abbas Araghchi on Thursday urged BRICS nations to condemn what he called violations of ‌international law by the United States and Israel, including "their illegal aggression" against his country.

His remarks at a two-day meeting in New Delhi underscore divisions within the expanded BRICS bloc, as the US-Israeli war on Iran casts a shadow over the gathering of foreign ministers.

Araghchi criticized Washington, describing the war as "illegal expansionism and warmongering," and said Iran remained open to diplomacy while being ready to defend itself "with ⁠all available means."

"Iran therefore calls upon BRICS member states and all responsible members of the international community to explicitly condemn violations of international law by the United States and Israel," he said.

The conflict, which began on February 28, has heightened geopolitical tensions and sparked a global energy crisis.

In his opening remarks, Indian Foreign Minister S. Jaishankar struck a cautious tone, avoiding direct criticism while stressing the importance of stability.

"The conflict in West Asia merits particular attention," Jaishankar said, without naming specific countries.

He said unimpeded maritime flows through international waterways, including the Strait of Hormuz ⁠and the Red Sea, were vital for global economic well-being.

He also flagged concerns over the growing use of unilateral sanctions, a longstanding point of contention among BRICS members.

"There is an increasing resort to unilateral ⁠coercive measures and sanctions inconsistent with international law and the UN Charter," he said. "Such measures disproportionately affect developing countries. These unjustifiable measures cannot substitute dialogue, nor can pressure replace diplomacy."

Jaishankar added that emerging economies expect BRICS to play a "constructive and stabilizing role" at a time of rising geopolitical fragmentation and economic uncertainty.

The grouping, originally comprising Brazil, Russia, India and China, was expanded to include South Africa in 2011, and more recently admitted Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates (UAE).

The expansion has boosted its global weight but also increased internal divergences on geopolitical issues. India holds the BRICS chair for 2026.

Iran's stance could make it difficult for BRICS — which operates by consensus — to agree on a joint statement, given the UAE’s presence on the opposing side.

Iran has launched numerous attacks on the UAE and other neighboring countries.

The effective closure of the Strait of Hormuz — a ‌critical artery ⁠that handles roughly a fifth of global oil shipments — has triggered one of the biggest supply disruptions in recent history.

The curbs on tanker traffic have pushed crude prices sharply higher, fuelling fears of renewed inflation, tighter financial conditions and a potential global economic slowdown, particularly for energy-importing economies such as India.

Separately, India's foreign ministry said on Thursday that an Indian-flagged ship was attacked off the coast of Oman on Wednesday and all crew on board were safe.

"The ⁠attack ... is unacceptable and we deplore the fact that commercial shipping and civilian mariners continue to be targeted."

However, two LPG tankers announcing India as their destination have crossed the Strait of Hormuz between Wednesday and Thursday, ship tracking data indicates.

The Marshall Islands-flagged Symi and Vietnam-flagged NV Sunshine are the first India-bound energy tankers to transit the fraught waters of the Strait of Hormuz in nearly two weeks. Both the LPG tankers have stated Gujarat’s Kandla port as their intended destination.

So far, 10 India-flagged vessels—nine LPG tankers and one crude oil tanker—have crossed the Strait of Hormuz since early March.

 

Trump: Diplomat, Opportunist, Hypocrite or Simply a Gambler?

The latest headline in Nikkei Asia — “Trump calls Xi ‘great leader,’ vows ties will be better than ever” — once again exposes the extraordinary contradictions that define the politics of US President, Donald Trump. Only recently, Trump had declared that the United States did not require Chinese cooperation to deal with a possible blockade of the Strait of Hormuz. At the same time, Washington continued tightening sanctions targeting the movement of Iranian oil to China while portraying Beijing as America’s principal strategic adversary.

The sudden shift in tone raises a serious question, who exactly is Donald Trump — a diplomat, an opportunist, a hypocrite, or simply a political gambler?

Diplomacy normally relies on consistency, credibility, and strategic clarity. Trump’s style appears fundamentally different. His statements often seem driven less by coherent long-term policy and more by immediate political or economic convenience. One-day China is accused of exploiting global trade, weakening American industry, and threatening international security. The next day, Xi Jinping is described as a “great leader” and bilateral relations are promised a bright future.

Such contradictions may energize domestic political audiences, but these simultaneously weaken America’s diplomatic credibility abroad. Allies struggle to understand Washington’s actual strategic direction, while rivals increasingly view American policy as transactional and unpredictable.

The contradiction becomes even sharper when examined alongside Trump’s broader policies. Sanctions on Chinese-linked Iranian oil trade, aggressive tariff rhetoric, restrictions on technology exports, and repeated efforts to economically isolate Beijing all reinforce the perception that Trump views China less as a business partner and more as a geopolitical foe. Yet whenever economic pressure begins unsettling American markets or threatening global supply chains, the rhetoric suddenly softens.

When a leader repeatedly alternates between portraying China as an existential threat and praising its leadership as indispensable, critics naturally begin questioning whether such statements reflect genuine policy or merely political convenience.

This is not classical diplomacy. It resembles high-stakes bargaining where confrontation and praise are alternated to maximize leverage. Trump appears convinced that unpredictability itself is a negotiating weapon. However, unpredictability may work in real estate deals; it becomes dangerous in global geopolitics.

Great powers can survive hostile rivals, but they struggle under inconsistent leadership. The real danger for America may not be China’s rise, but Washington’s inability to decide whether Beijing is an enemy to confront or a partner it ultimately cannot live without.

Trump Lost Before the Game Started

The recent visit of Donald Trump to China was presented as a major diplomatic engagement aimed at resetting communication between the world’s two largest economies. Yet, even before substantive discussions began, the visit exposed an uncomfortable geopolitical reality for Washington - the United States appeared to need China’s cooperation more than China needed American approval.

For years, Trump built his political narrative around confronting China. Tariffs, technology restrictions, sanctions, and economic pressure were all designed to slow Beijing’s rise and reinforce American dominance. However, global developments have revealed the limitations of pressure-driven diplomacy in an increasingly interconnected world.

The contradiction became particularly visible in the context of the Iran conflict. Senior American officials openly acknowledged that China possesses considerable leverage because of its close economic relationship with Tehran and its dependence on Iranian oil supplies. Washington’s indirect appeal for Beijing’s assistance in stabilizing the Strait of Hormuz was more than a diplomatic request; it was recognition that China has become an indispensable stakeholder in global crisis management.

Trade tensions further underline this strategic reversal. After years of tariff wars that disrupted supply chains and increased costs worldwide, both sides are now seeking mechanisms to preserve economic engagement. Discussions surrounding new trade and investment coordination frameworks suggest that confrontation alone failed to produce the decisive advantage Washington once expected.

At the same time, difficult issues remain unresolved. Differences over Taiwan, semiconductor restrictions, artificial intelligence, and human rights continue to shape relations between the two powers. Yet despite these disputes, the United States still finds itself compelled to engage Beijing on virtually every major global challenge.

This is where the symbolism of Trump’s visit becomes important. A leader who once projected China as an adversary to be economically isolated has now arrived seeking cooperation on trade stability, regional security, and technological governance. Diplomatically, the visit may produce positive optics. Strategically, it reflects a deeper shift in global politics.

Great powers can impose sanctions, launch tariff wars, and escalate rhetoric, but they cannot indefinitely ignore geopolitical realities. In today’s emerging multipolar order, influence increasingly belongs not to the loudest power, but to the one others cannot afford to bypass.

Trump Pushing China Towards Confrontation

Just before departing for China, US President Donald Trump imposed another round of sanctions targeting the movement of Iranian oil to China. Officially, Washington presents the move as part of its pressure campaign against Iran. In reality, the sanctions expose a far bigger strategic objective - tightening America’s economic grip around China.

This is not an isolated policy decision. Since returning to power, Trump has aggressively revived tariff wars, expanded restrictions on Chinese technology, intensified pressure on supply chains, and openly challenged Beijing’s growing influence across Asia and the Middle East. The latest sanctions simply add energy security to Washington’s expanding list of pressure tactics.

China’s economic machine depends heavily on uninterrupted energy imports. Iranian crude, often available at discounted prices, has remained an important component of China’s energy strategy despite Western sanctions. By attempting to choke these supplies, Washington is effectively signaling that no sector of the Chinese economy will remain outside the reach of American coercive power.

The message becomes even more provocative when discussions surrounding the Strait of Hormuz are taken into account. Any blockade or disruption in this critical maritime corridor would severely impact Chinese industry, exports, and economic stability. Whether openly stated or not, the strategic implication is unmistakable - the United States is demonstrating its capacity to threaten the economic lifelines of its principal global rival.

Washington may be dangerously misreading Beijing’s patience. Today, China is not a weak, inward-looking economy of the 1990s. It is a global economic giant, a technological competitor, and an emerging military power increasingly unwilling to bow before American pressure. Every new tariff, sanction, or strategic threat deepens Chinese mistrust and accelerates Beijing’s efforts to reduce dependence on Western-controlled financial and trade systems.

From a geopolitical perspective, Trump appears convinced that sustained pressure will force China into strategic compromise. Yet history often produces the opposite result. Major powers rarely surrender under humiliation; they retaliate when they conclude that confrontation has become unavoidable.

The danger is that Washington’s relentless pressure campaign may gradually transform economic rivalry into open geopolitical hostility. If that happens, the consequences will extend far beyond China and America, shaking global trade, energy markets, and already fragile international stability.

From Ultimatums to Outcomes: Reframing Iran Endgame

Donald Trump’s dismissal of Iran’s response as “totally unacceptable” signals a negotiating stance that leaves little room for outcomes. When diplomacy is reduced to demands for capitulation, escalation becomes less a risk and more an inevitability.

The challenge, however, is not just Washington’s posture. Iran, shaped by years of sanctions and strategic isolation, is equally unlikely to yield under pressure. This creates a familiar deadlock—where both sides talk past each other, and the costs are externalized to the region and the global economy.

A more credible pathway lies not in maximalist demands, but in sequenced reciprocity.

First, de-escalation must begin with restoring stability around the Strait of Hormuz. Ensuring uninterrupted maritime flow should be treated as a shared obligation, not a bargaining chip.

Second, sanctions relief should be structured, phased, and conditional—tied to verifiable commitments. This shifts the dynamic from coercion to compliance.

Third, both sides need to acknowledge that absolute victory is neither realistic nor necessary. Strategic restraint often delivers more durable outcomes than rhetorical dominance.

Finally, a framework for post-conflict stabilization—whether through indirect compensation, reconstruction channels, or multilateral engagement—can help rebuild minimal trust without forcing politically unviable concessions.

Diplomacy succeeds not when one side surrenders, but when both sides find a way to step back without losing face. Without that recalibration, the current trajectory risks becoming a prolonged and costly stalemate with no clear exit.