PSX benchmark index declines 6.3%WoW

At Pakistan Stock Exchange (PSX) sentiments remained subdued during the week, due to the escalation of war threats, alongside tensions on the Pak–Afghan border. Consequently, the index declined by 10,566 points or 6.3%WoW during the week, closing at 157,496 points on Friday, March 06, 2026.

Market participation slowed during the week, with average daily traded volumes decreasing by 24%WoW to 791 million shares, compared to 1.0 billion shares in the prior week.

Monday witnessed the second-largest single-day drop in the index’s history, plunging by 16,089 points or 9.6%. The sharp fall appeared to be an overreaction, followed by a partial recovery in the subsequent sessions.

Meanwhile, the Middle East conflict resulted in the closure of the critical Strait of Hormuz, triggering a 16.3%WoW surge in the price of the Oil benchmark Arab Light to US$83.1/ bbl. This development raises concerns over energy security, inflationary pressures, and the external account, weighing on overall market sentiment despite Pakistan’s ability to manage the situation.

On the macro front, inflation rose to a 16-month high of 7% in February 2026 amid heightened volatility.

On the external front, trade deficit widened 5%YoY to US$3.0 billion in February 2026.

Cement offtakes recorded a 13%YoY increase in February 2026.

Other major news flow during the week included: 1) GoP raises PKR555 billion through T-Bills auction; yields move up, 2) Pakistan refinery secures crude via Fujairah, Red Sea amid Hormuz closure, 3) SBP governor confident about GDP growth and inflation, 4) OGDC strikes major oil, gas discovery in Kohat of daily 3,800 bpd oil and 11.2mmcfd gas, and 5) foreign exchange reserves held by State Bank of Pakistan (SBP) rose by US$87 million to US$16.3 billion as of February 27, 2026.

While Refinery remained the sole top performer, laggards included Vanspati & Allied

Major selling was recorded by Mutual Funds and Foreigners with a net sell of US$56.0 million and US$22.1 million. Banks and Companies absorbed most of the selling with an aggregate net buy of US$49.5 million.

Top performing scrips of the week were: ATRL (up 4.8%WoW), 2) MARI (up 2.0%WoW), 3) KEL (up 2.0%WoW), 4) DHPL (up 1.7%WoW), and 5) HUMNL (up 1.1%WoW), while laggards included: JVDC, KTML, AKBL, SSOM, and PAEL.

According to AKD Securities, market sentiments are likely to be dictated by developments in the ongoing Middle East conflict. Meanwhile, GoP’s ongoing efforts to address energy conservation, the ongoing IMF review, and SBP’s commentary in upcoming MPC meeting on Monday would also remain key areas of investor focus.

In the medium term, any de-escalation of Middle East military conflict could trigger a significant market recovery, as the recent correction has made market valuations much more appealing.

The brokerage house anticipates the benchmark Index to reach 263,800 by end December, 2026.

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

Foreign Policy or Political Insanity?

In international relations, powerful nations often attempt to influence developments beyond their borders. Yet a fundamental principle of the global order remains the sovereignty of states. When foreign policy begins to challenge that principle too openly, it risks appearing less like strategy and more like political recklessness.

Recent remarks by Donald Trump have revived this debate. In an interview with Axios, Trump asserted that he must be personally involved in selecting Iran’s next Supreme Leader following the death of Ali Khamenei. Dismissing the potential succession of Mojtaba Khamenei as “unacceptable,” the US president suggested Washington should help determine Iran’s future leadership to ensure “harmony and peace.”

Such a proposition is extraordinary even in the hard realities of power politics. Leadership transitions are among the most sensitive internal matters of any nation. A foreign leader openly claiming a role in deciding another country’s highest authority inevitably raises questions about respect for sovereignty and the norms that underpin international diplomacy.

The statement also resonates strongly in historical context. Iran’s modern political memory already carries the imprint of external intervention, particularly the 1953 Iranian coup d'état that strengthened the rule of Mohammad Reza Pahlavi. That episode continues to shape Iranian perceptions of Western intentions.

Critics argue that Trump’s remarks reflect a broader pattern in his approach to global affairs. His presidency has witnessed sweeping punitive tariffs against trading partners, a reliance on executive orders to push policy objectives, and military intervention in Venezuela that led to the removal of Nicolás Maduro and the emergence of Delcy Rodríguez as the country’s leader.

Whether one views these actions as decisive leadership or excessive unilateralism, the implications are significant. Attempting to influence leadership outcomes in a country as politically and religiously complex as Iran risks inflaming nationalist sentiment and prolonging geopolitical tensions rather than resolving them.

Ultimately, the question confronting the international community is stark - when powerful states begin asserting the right to shape the leadership of other nations, does foreign policy remain diplomacy—or does it begin to resemble political insanity?

Has Israel Pushed US into War Against Iran?

The latest military confrontation involving the United States and Iran did not emerge in a vacuum. It followed Israeli escalation that Washington ultimately chose to join. The central question, therefore, is not whether America is now at war — it clearly is — but whether the pathway to war was shaped primarily in Tel Aviv rather than Washington.

For years, US policy has demonstrated near-automatic alignment with Israel’s security doctrine. Strong diplomatic cover and sustained military support during regional crises created a strategic environment in which Israeli planners could reasonably assume American backing in the event of wider confrontation. When Israeli strikes expanded toward Iran in mid-2025, that assumption appeared to hold. The United States did not restrain the escalation; it became a direct participant.

The recent Senate briefing by Secretary of State Marco Rubio and senior defense officials has done little to clarify the strategic endgame. Lawmakers from both parties emerged expressing uncertainty about objectives, timelines, and even the possibility of deploying ground troops. Concerns over drone defenses, casualties, and munitions stockpiles further suggest that the conflict may be broader and more prolonged than initially presented.

This pattern evokes uncomfortable historical parallels with the Iraq War — a campaign launched with confidence but sustained amid shifting justifications and unclear exit strategies. No two conflicts are identical, yet the strategic risks of escalation without defined political outcomes remain constant.

To be clear, Iran’s regional posture and missile capabilities are not trivial matters. Nor can Israel’s security anxieties be dismissed. However, the responsibility of a global power extends beyond alliance solidarity. It requires independent assessment of costs, consequences, and long-term regional stability.

If Israeli action triggered the sequence of escalation and the United States entered primarily to preserve alliance credibility, then Washington must ask whether it is shaping events — or being shaped by them. Strategic partnerships are assets, but they should not become conduits for unintended wars.

At stake is not merely battlefield success, but America’s claim to strategic autonomy. In geopolitics, perception often hardens into reality. The longer this war continues without clearly articulated objectives, the louder the question will grow: who truly set this course?

Did the United States Build Gulf Bases to Protect Arab Monarchies — or Israel?

The enduring American military presence across the Gulf — from Bahrain and Qatar to United Arab Emirates and Saudi Arabia — has long been justified under the doctrine of regional stability and collective defence. Successive US administrations have argued that these bases serve as a deterrent against external threats, particularly from Iran, portrayed as a revisionist power challenging the Gulf monarchies and the broader regional order. Defence agreements were signed, billions of dollars’ worth of advanced weaponry was purchased, and a security architecture was institutionalized under the American umbrella.

However, recent escalations — including coordinated US–Israeli strikes on Iranian targets in 2025 and 2026, followed by retaliatory attacks on American installations inside Gulf states — have reignited a fundamental question: were these bases primarily designed to shield the Gulf emirates, or to guarantee strategic depth for Israel? Critics argue that the pattern of engagement suggests a security arrangement in which Gulf territories function less as protected partners and more as forward operating platforms in a broader US–Israel strategic calculus. Supporters of the status quo counter that without American deterrence, Gulf capitals would face far greater vulnerabilities.

The debate, therefore, is not merely about military installations; it concerns sovereignty, threat perception, and the true beneficiaries of regional security alignments. Were Gulf leaders persuaded to view Iran as the primary existential threat while Israel remained outside their formal defence calculus? Or is this interpretation an oversimplification of a far more complex geopolitical reality?

I invite readers to reflect critically:
Are US bases in the Gulf fundamentally defensive shields for Arab monarchies — or strategic assets designed to preserve Israel’s qualitative military edge?
Has recent regional escalation validated long-standing security assumptions, or exposed their limitations?

Your considered views will enrich this debate.

Is Larijani Trump’s Likely Choice to Rule Iran?

The reported assassination of Ali Khamenei has pushed Iran into a moment of deep uncertainty. As Washington reassesses its objectives following joint US–Israeli strikes, speculation is mounting over whether the United States would quietly favor a particular figure to stabilize Tehran. Among the names circulating in policy discussions is Ali Larijani — a seasoned insider with deep roots in Iran’s national security establishment.

Larijani is no outsider. A former speaker of parliament, veteran nuclear negotiator and long-time power broker, he has operated at the heart of the Islamic Republic for decades. In the weeks before Khamenei’s death, he was reportedly entrusted with broader strategic responsibilities, reinforcing his standing within the system. That positioning makes him one of the few figures capable of navigating Iran’s complex factional landscape.

President Donald Trump, meanwhile, has sent mixed signals about Washington’s ultimate aims — oscillating between suggestions of regime change and more limited objectives focused on missiles, nuclear capability and regional proxies. Such ambiguity may be deliberate, allowing room for negotiation if outright systemic collapse proves too costly or destabilizing.

In that context, Larijani’s profile presents both opportunity and risk. Critics describe him as deeply embedded in the regime’s hard power structure, including close interaction with security institutions. Supporters argue that precisely because of his establishment credentials, he could command trust across competing factions — a prerequisite for any controlled transition.

Still, Iran’s constitutional framework cannot be ignored. The Assembly of Experts retains authority to select the next Supreme Leader, and any interim arrangement would remain internally driven. External influence, however significant, has limits.

The central question is not whether Washington can “pick” Iran’s ruler — it cannot. Rather, it is whether US policymakers would prefer dealing with a pragmatic insider capable of negotiation over a fractured and unpredictable power vacuum. If stability and containment become the priority, Larijani may appear to some in Washington as a workable, if imperfect, interlocutor.

In geopolitics, choices are rarely ideal, these are calculated.

Pakistan: Strait of Hormuz risk back in focus

According to a report by Inter Market Securities, the renewed escalation in US-Iran hostilities marks reversal from the constructive progress emerging from last week’s dialogue in Geneva, wherein both sides signaled towards a possible agreement. Early Saturday, the US acknowledged attacks on key Iranian targets, which was followed by waves of retaliatory attacks by Iran on US installations in the GCC region (UAE, Qatar, Kuwait, Bahrain, Jordan and Saudi Arabia). While the duration of the conflict is uncertain, geopolitical risks are likely to be repriced by markets of all asset classes via higher energy, commodity and freight costs, especially due to rising concerns of a potential disruption in the Strait of Hormuz.

The Strait of Hormuz – a narrow maritime corridor which links the Persian Gulf with the Gulf of Oman – is a critical route for the global energy trade, facilitating nearly one-fifth of global oil, petroleum and LNG trade, alongside nearly one-fourth of global seaborne trade. A partial disruption of the strait can materially lift oil prices and shipping freight. Beyond hydrocarbons, the strait is a key route for 25-30% of global seaborne minerals and 15% of chemicals/ fertilizer trade, among others, indicating worrisome implications on global growth and inflation. During the June 2025 US-Iran escalation (between June 13-24), Brent crude surged more than 10% DoD on June 13, before peaking later in the period north of US$77/bbl, before retracing as tensions dwindled. A similar situation played out early today when markets opened, with Brent crossing US$81/bbl (before retracing). If hostilities persist, oil could be pushed beyond US$80/bbl as well.

Notably, the KSE100 has historically reacted negatively to such events, due to Pakistan’s heavy reliance on imported crude oil and other commodities, giving rise to concerns of a potential deterioration of macroeconomic indicators. The KSE100 corrected 7% between the period before rebounding alongside de-escalation (market halted at the start of the day today). Therefore, a comparable risk-off episode cannot be ruled particularly if oil prices persistently remain elevated (negative for both inflation and the external account).

In the event of a prolonged oil price shock, the near-term macro implications for Pakistan would primarily be inflationary in absence of a swift de-escalation. For every US$5/bbl move in oil prices above with base case of US$65/ US$60/ bbl raises the next 12-month CPI estimates by an average 40bps. Additionally, given Pakistan’s structural reliance on energy imports, primarily crude related imports, 18% of overall import bill FY26 to date, higher oil prices would also weigh on the country’s external account, as a percent of GDP increasing by 20bps each for every US$5/bbl increase. That said, geopolitical oil spikes tend to be temporary, with prices retracing rapidly as tensions ease, limiting the impact on macro estimates.

Despite immediate macro risks, the brokerage house continues to remain constructive on Pakistan equities. The recent market correction has opened up valuation upside, while the earnings outlook and broader macro backdrop remain largely intact. Unless oil prices sustain higher for longer, the brokerage house sees the current market valuations as an attractive entry point.

 

Khamenei: A Leader Par Excellence

The passing of Ali Khamenei closes a defining chapter in the contemporary history of Iran. For more than three decades, he stood at the helm of a nation navigating relentless sanctions, diplomatic isolation, covert pressures, and open hostility led primarily by the United States and its regional ally, Israel. Yet, through turbulence and uncertainty, he projected continuity and resolve.

Khamenei’s leadership was forged in adversity. He inherited a revolutionary system still consolidating itself after war and internal transition. Over time, waves of economic sanctions and strategic containment sought to exhaust Iran’s capacity. Instead, the state apparatus endured. Institutions functioned, elections were held within constitutional timelines, and political processes — however debated externally — continued without systemic collapse. For his supporters, this was proof of institutional resilience under pressure.

He was neither a conventional politician nor merely a symbolic figure. He combined ideological steadfastness with calculated pragmatism. Negotiations were pursued when deemed necessary; resistance was emphasized when sovereignty was perceived to be at stake. His posture was often uncompromising, yet it reflected a consistent strategic doctrine: survival through endurance.

It is no secret that immense military, intelligence, and economic power was mobilized over decades to challenge the system he led. The geopolitical environment surrounding Iran was rarely neutral. Regional realignments, shifting alliances, and calculated silences frequently shaped the strategic space in which external pressure operated. Historians will debate the extent to which global and regional dynamics influenced the course of events. What is beyond dispute, however, is that Iran did not fracture under sustained coercion.

Leaders depart, but legacies are measured by institutional durability. Those who believed that sustained pressure alone could bend Iran’s trajectory repeatedly encountered a more complex reality. Nations shaped by adversity often internalize resilience.

Ali Khamenei’s era will be remembered for confrontation, endurance, and continuity. His critics may question his methods; his followers will celebrate his steadfastness. Yet history is likely to record one central fact: despite extraordinary external pressure, Iran remained intact — and its future will now test whether the structures he fortified can carry that legacy forward.