Karachi: The Pakistan Stock Exchange (PSX) ranked among the world’s worst-performing equity markets in the first quarter of 2026, recording a steep decline in dollar terms amid rising geopolitical and economic pressures, according to data released by Topline Securities Ltd.
The benchmark KSE-100 Index posted a negative return of 14.6% in USD terms during 3QFY26, placing Pakistan among the bottom three global markets. In comparison, regional peers also struggled, with India and Indonesia recording losses of 19.4% and 19%, respectively.
Global tensions and inflation weigh on investor sentiment
Analysts attributed the downturn primarily to escalating geopolitical tensions involving Iran, Israel, and the United States, which dampened investor confidence across regional markets. Moreover, concerns over rising domestic inflation and surging global energy prices further pressured equities.
In contrast, several frontier and emerging markets outperformed significantly. Countries such as Ghana, Oman, and Nigeria posted strong gains, highlighting a divergence in investor flows toward more stable or opportunity-driven markets.
Policy shifts and fuel price hikes add to market volatility
Meanwhile, the KSE-100 Index continued to face volatility during the past week, closing at 150,399 points after a 0.9% weekly decline. Persistent selling pressure reflected uncertainty tied to both global developments and domestic policy changes.
Notably, the government’s decision to end fuel subsidies triggered sharp increases in energy prices, with diesel rising by 55% and petrol by 43%. Consequently, investor sentiment weakened further.
However, Prime Minister Shehbaz Sharif later announced a temporary reduction in the petroleum levy by Rs80 per litre for one month, offering limited relief to markets.
Overall, the data highlights the PSX’s sensitivity to external shocks and macroeconomic instability.
