Yemen: Where Saudi and Emirati Paths Parts

For much of the past decade, Yemen has been framed as a proxy battleground between Saudi Arabia and Iran. Yet beneath this familiar narrative lies a quieter but increasingly significant fault line - the divergence between Saudi Arabia and the United Arab Emirates. Though, both entered the Yemen war as close allies, their strategic priorities have steadily drifted apart.

Saudi Arabia’s engagement has remained fundamentally security-centric. Yemen is Riyadh’s vulnerable southern flank, and the prospect of an Iran-aligned force entrenched in Sana’a poses a direct threat. This explains the kingdom’s consistent emphasis on Yemen’s territorial integrity and its support for a strong, central government capable of asserting authority nationwide. For Saudi Arabia, a fragmented Yemen is not a solution but a long-term liability.

The UAE, while initially aligned with these goals, adopted a markedly different approach as the conflict evolved. Abu Dhabi focused less on Yemen’s political center and more on its strategic periphery. Control over ports, islands, and coastal corridors—Aden, Mukalla, Socotra, and areas near the Bab el-Mandeb strait—became central to Emirati calculations. These assets sit astride vital global trade and energy routes, giving them value far beyond Yemen’s internal politics.

This divergence became most visible in southern Yemen. The UAE backed local militias, most notably the Southern Transitional Council (STC), which advocates autonomy or independence for the south. While these forces proved effective in securing territory and countering militant groups, they also challenged the authority of the Saudi-backed Yemeni government. Repeated clashes between allied factions exposed the incompatibility of Saudi and Emirati endgames.

For Riyadh, decentralization risks prolonged instability and leaves the north vulnerable to sustained Houthi—and by extension Iranian—influence. For Abu Dhabi, a decentralized or divided Yemen, with friendly actors controlling key maritime nodes, offers influence without the burden of governing a fractured state.

Tensions were further sharpened by differing risk calculations. Saudi Arabia remained deeply exposed militarily and diplomatically as the war dragged on. The UAE, by contrast, reduced its direct military footprint after 2019, outsourcing security to local allies while retaining strategic leverage. This asymmetry quietly altered the balance within the coalition.

The Saudi–UAE rift in Yemen is not ideological, nor is it an outright break. It is a case study in how alliances strain when national interests diverge. Yemen has revealed a fundamental truth of regional geopolitics - partners may fight together, but they rarely fight for the same future.

PSX Benchmark index up 3.8%WoW

Pakistan Stock Exchange (PSX) moved upwards sharply during the week, with benchmark Index advancing 6,634 points, up 3.8%WoW, to close at a fresh all-time high of 179,035 points.

Market participation improved by 9.7%WoW, with average daily traded volume rising to 1.3 billion shares, as compared to 1.1 billion shares in the prior week.

Momentum was driven by a favorable new year effect alongside a softer than expected December 2025 inflation of 5.6%.

Sentiments were further buoyed by sharp rally in the E&P sector, following OGDC’s oil and gas discovery in Nashpa Block, where a second formation delivered 4,100 barrels oil and 10.5mmcfd gas, adding to the earlier discovery announced in December 2025.

OMC volumes also increased by 6%YoY during December 2025.

On the macroeconomic front, Trade deficit increased by 24%YoY to US$3.7 billion during December 2025, whereas, GDP grew by 3.7%YoY during 1QFY26.

Foreign exchange reserves held by State Bank of Pakistan (SBP) increased by US$13 million to US$15.9 billion as of December 26, 2025.

Other major news flow during the week included: 1) SBP buys US$6.9 billion from currency market in 12 months, 2) FBR collects PKR6.2 trillion in 1HFY26, but falls short by PKR338 billion of target, 3) Pakistan Eyes US$1 billion Liability Settlement via UAE investment in Fauji Group, 4) US seeks Pakistani partnership in locomotive sales, mineral exploration, and 5) Pakistan gets ready to launch first Panda bond in China.

Transport, Property, Vanaspati & Allied Industries, Oil & Gas Exploration Companies, and Pharmaceuticals were amongst the top performing sectors, while Jute, Woollen, Cement, Real estate Investment Trust, and Textile Composite, were amongst the laggards.

Major buying was recorded by Mutual Funds and Companies with a net buy of US$24.5 million and US$9.4 million, respectively. Foreigners and Banks were major sellers with net sell of US$18.8 million and US$10.7 million respectively.

Top performing scrips of the week were: JVDC, SSOM, UBL, FFL, and EFERT, while laggards included: DGKC, CHCC, KTML, KOHC, and MLCF.

AKD Securities foresees the positive momentum in the benchmark index to continue due to further monetary easing driven by improving external account position and continuous focus on reforms amid political stability.

The brokerage forecasts the benchmark Index to reach 263,800 by December 2026.

Investors’ sentiments are expected to improve on the likelihood of foreign portfolio and direct investment flows, driven by improved relations with the United States and Saudi Arabia.

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

Year 2026 Key Events

Happy New Year from Nikkei Asia! It's the beginning of 2026, and in newsroom operations, one of the most important tasks is scheduling. Of course, the news never unfolds exactly as we predict. Our profession is to plan, prepare for news and respond flexibly to breaking headlines, grounded in meticulous reporting. With that caveat, I'd like to share my humble predictions on key news events likely to happen this year in Asia and beyond.

First, Asia has some major elections coming up. In Myanmar, the first general election since the military seized power in 2021 is being held in stages, with results expected by the end of January. Even after the election, military-friendly rule will probably remain, as will tensions with pro-democracy forces and ethnic groups. What deserves attention is how regional organizations like ASEAN as well as neighboring and major countries position themselves toward Myanmar's new administration. Following that, elections will be held in Thailand and Nepal. Thailand's general election is expected to significantly impact the country's uncertain relationship with Cambodia.

In business and tech, AI and EVs will be in the spotlight again following last year's booms. Massive data centers were built across Asia, and Chinese-made EVs expanded their market share, particularly in Southeast Asia. In AI, concerns about a stock market "bubble" remain strong, and whether that boom continues, deflates or goes bust will be a significant focus. Since Western markets hesitated to join the rapid EV shift, sales of Chinese EVs are likely to keep surging, especially in Asia. However, the crowded sector has given way to excessive competition, and this year may clearly separate winners from losers.

From June to July, the FIFA World Cup will be held in the U.S., Canada and Mexico. I'll refrain from predicting the champion, but you all know which team I'm rooting for. And this time, I think we might make it pretty far.

In November, the U.S. will hold midterm elections, which will serve as a verdict on President Trump's first two years in office. Over the past year, the president has shaken Asia and the rest of the world with threats and tariffs. This year, especially in the latter half, he will likely have to turn his attention to domestic issues. That said, Trump has defied every prediction so far, so caution is warranted.

How will China's economy evolve? Will U.S.-China relations improve or worsen? Predictions could go on endlessly, so I'll stop here. One thing is for sure in an increasingly uncertain world: Nikkei Asia's reporters and editors will spare no effort to deliver fact-based, insightful journalism on all issues. Please continue to look forward to Nikkei Asia's coverage in 2026.

Courtesy: Nikkei Asia

Western Media’s Selective Outrage on Iran

Protests are a natural and fundamental part of any society whose citizens care about their future and believe they can influence it. They are not a sign of systemic failure, but an indicator of civic health and the practice of free speech, assembly, and association. For Western states, their media, and their politicians, all of this holds true—except when the protests occur in Iran.

The unprecedented volatility in the currency market and the rapid devaluation of the Iranian Rial in recent weeks compelled business owners (known as bazaaris) to shutter their shops, go on strike, and gather in several of Tehran’s central squares to voice their discontent. Reports from journalists on the scene and footage shared by participants indicate the protests—spanning several days—remained largely peaceful.

Demonstrators refrained from vandalizing public property, kept pathways open for vehicles, and directed their slogans toward improved economic management. Anti-riot forces monitored the gatherings and seldom intervened. None of what has emerged from Iran would be unfamiliar in the regular protests seen across European capitals or American cities.

Yet this manner of protest does not sit well with the West or with Israel. Circulated videos show unidentified individuals urging bazaaris to vandalize property and block streets. In one instance, a young woman addressing a crowd fled after protesters refused to escalate into violence. In another, a man attempted to set a municipal trash bin ablaze before bystanders intervened and security forces arrested him. None of the bazaaris recognized him afterward.

Simultaneously, an online influence campaign has emerged, editing videos and fabricating audio to falsely suggest protesters are demanding the return of the deposed Shah’s son. A widely circulated image symbolizing the protests was later exposed as AI-generated.

Israel has openly admitted deploying agents to steer these peaceful demonstrations toward chaos. Mossad’s Persian-language account urged Iranians to “hit the streets,” while an Israeli television reporter openly called for organizing protests to justify a wider war. Iran International echoed similar narratives, promoting escalation as a pathway to foreign military action.

Political figures joined in. Former Israeli Prime Minister Naftali Bennett declared his readiness to help Iranians achieve “freedom,” while US President Donald Trump warned Iran of further “turmoil,” without acknowledging that Iran’s economic distress stems largely from the “maximum pressure” sanctions he imposed in 2018.

Iranian authorities acknowledged the protests and announced steps to stabilize the Rial. President Masoud Pezeshkian and Parliament Speaker Mohammad Baqer Qalibaf both described the demonstrations as legitimate while cautioning against foreign exploitation.

Ultimately, these events reveal a clear double standard - peaceful assembly is praised in one context yet exploited when it occurs in a country opposed by Western and Israeli interests. The true measure of these protests lies not in sensationalized narratives from abroad, but in the legitimate and orderly spirit shown by the Iranian people themselves.

PSX Benchmark Index up 51 percent in 2025

According to Pakistan’s leading brokerage house, Topline Securities, Pakistan Stock Exchange (PSX) during 2025 posted return of 51%, taking 2 years cumulative returns to 179%. In US$ terms, market posted return of 50% (2 year returns 180%). The stated return is inclusive of dividends received during this period.

The larger portion of the price return (40%) came through re-rating of index, with PE rising from 4.1x in December 2024 to 7.1x in December 2025. The dividend yield during the year was 8%.

The continuation of positive momentum was driven by stable and improving economy, political stability, lower interest rates and stable PKR also helped.

Major triggers during the year which helped index in re-rating included: 1) Successful IMF review throughout the year, 2) Credit rating upgrade by all 3 top global rating agencies S&Ps, Moody’s and Fitch, 3) decline in interest rate by 250 bps, 4) stable/ improved macro indicators, 5) Saudi Arabia- Pakistan Defence Pact, and 6) PIA privatization.

During the year, market also witnessed few volatile event s namely Pakistan India Conflict of May 2025, which resulted in market losing 5.6% in 3 sessions, recovered all losses in a single day after successful mediation by US president Donald Trump. Other events which caused volatility in market were, Iran Israel war, and imposition of tariffs by United States on global economies including Pakistan.

PSX market capitalisation also increased by 36% in 2025 to US$70 billion but still below its 2017 peak of US$100 billion.

Trading activity recorded strong growth in both volume and value, with volumes (ready/ cash) per day at PSX up 40% to 797 million shares/ day in 2025 which is all time high. Similarly, average traded value per day was up 64% to PKR37 billion/ day in cash market which is also all time high. In futures market, total traded volume and value per day were also up by 35% and 76% to 249 million share/ day and PKR14 billion/ day, respectively.

As per Bloomberg data, Pakistan’s KSE-100 Index was among the fifth best-performing markets in Asia/ Pacific region in US dollar terms in 2025.

The KSE Index remained the second-best performing major asset class in 2025, while gold was the top performer with a return of 73%, based on selected investment assets class in Pakistan.

PSX witnessed same momentum in offerings in 2025, with the bourse witnessing 7 offerings (including 2 GEM Board offerings and 1 Migration). However, total amount raised from investors through the 7 offerings in 2025 stood at PKR4.3 billion as against PKR8.4 billion in 2024.

Economic Assassination: US Pressure Crippling Venezuelan Economy

Donald Trump’s revived “maximum pressure” strategy on Venezuela is no longer an abstract policy tool; it is inflicting visible damage on the country’s economic core. The clearest impact is unfolding in the oil sector, where state-run PDVSA has begun shutting down wells in the Orinoco Belt as inventories swell and tanker seizures disrupt exports. What began as pressure aimed at political leverage is increasingly resembling economic strangulation.

For much of 2025, Venezuela’s oil output had been staging a cautious recovery. Production averaged around 1.165 million barrels per day in November, a 20%YoY increase that provided a rare fiscal lifeline. That momentum now appears fragile.

According to Bloomberg, PDVSA plans to cut Orinoco Belt output by at least 25%, reducing production to roughly 500,000 barrels per day. Such a reduction could wipe out nearly 15% of Venezuela’s total liquids production, reversing much of the year’s gains and intensifying balance of payments stress in an economy already under strain.

The cuts are being applied selectively, underscoring the depth of operational constraints. Extra-heavy crude from the Junín block is expected to be curtailed first, as these fields depend heavily on imported diluents. Lighter crude fields, requiring fewer blending inputs, are being kept online for as long as possible to preserve limited export capacity.

While diluent flows have not fully stopped, these are increasingly unreliable. Russian suppliers have delivered four tankers of naphtha so far in December, even as seizures of very large crude carriers continue. Yet supply disruptions are no longer the sole bottleneck. Limited storage for upgraded bituminous crude, combined with constrained export routes, is turning unsold oil into stranded inventory. Wells are being shut not for lack of reserves, but for lack of access to markets.

The broader implications are difficult to ignore. Sanctions are no longer merely restricting Venezuela’s ability to sell oil; they are shaping production decisions inside the country. When external pressure determines which wells remain operational, the line between economic coercion and economic punishment becomes increasingly blurred.

Whether this amounts to “economic assassination” is open to debate. What is clear is that the costs extend beyond political elites. With oil revenues underpinning the entire economy, Venezuela’s fragile recovery risks sliding into renewed contraction—raising uncomfortable questions about the humanitarian and strategic price of maximum pressure.

Obituary: Khaleda Zia

Khaleda Zia, Bangladesh’s first woman prime minister and one of the most consequential — and polarizing — figures in the country’s post-independence politics, died on Tuesday after a prolonged illness, she was 80. Her death marks the end of an era dominated for more than three decades by an intense rivalry that shaped Bangladesh’s political culture, institutions and democratic trajectory.

Born Khaleda Khan, she lived a largely private life until tragedy thrust her into public prominence. Described by contemporaries as shy and family-oriented, she devoted herself to raising her two sons until the assassination of her husband, President Ziaur Rahman, in a failed military coup in 1981. Three years later, she assumed leadership of the Bangladesh Nationalist Party (BNP), founded by her late husband, pledging to fulfil his vision of rescuing Bangladesh from poverty and economic stagnation.

Khaleda Zia rose to national leadership during a historic moment. Alongside Sheikh Hasina, daughter of Bangladesh’s founding leader Sheikh Mujibur Rahman, she led a popular uprising that toppled military ruler Hossain Mohammad Ershad in 1990. Yet the alliance soon collapsed, giving birth to one of South Asia’s fiercest political rivalries. The two leaders came to be known as the “battling Begums,” their contrasting personalities and uncompromising politics dominating public life for decades.

In 1991, Khaleda Zia won Bangladesh’s first widely regarded free and fair election, becoming the country’s first female prime minister and only the second woman to lead a democratic government in the Muslim world after Pakistan’s Benazir Bhutto. Her government restored the parliamentary system, encouraged foreign investment, and made primary education free and compulsory.

Defeated in 1996, she returned to power with a landslide victory in 2001. However, her second term was overshadowed by the rise of Islamist militancy, allegations of corruption, and political violence, including the deadly 2004 grenade attack on an opposition rally — an episode that would haunt her legacy.

Ousted from power in 2006, Khaleda Zia spent years in jail or under house arrest amid corruption cases she consistently denounced as politically motivated. Her health steadily declined, and she was released on humanitarian grounds before being fully freed in 2024 following the ouster of Sheikh Hasina. Earlier this year, the Supreme Court acquitted her and her family in the long-running corruption cases.

Though long absent from office, Khaleda Zia remained a commanding presence, with the BNP retaining deep popular roots. Her death closes a turbulent chapter in Bangladesh’s history — one defined by resilience, rivalry, and the enduring struggle for democratic stability.