Stock market index KSE-100 surpasses 142,000 marks for the first time in its history.
The US-Pakistan trade deal, announced in late July 2025, is expected to have a positive impact on the Pakistani Stock Exchange (PSX) and the Pakistani economy. Here's a breakdown of the key factors driving this optimism.
The agreement has lowered US tariffs on a broad range of Pakistani products to 19%, down from an initially proposed 29%. This makes the US tariff rate on Pakistani goods the lowest in South Asia, including compared to competitors like Vietnam and India, which now face higher tariffs (20% and 25% respectively). Since the US is Pakistan’s largest export market—about $6 billion of $32 billion total exports in the previous fiscal year—this tariff reduction is expected to significantly boost Pakistani exports to the US.
Another significant aspect of the deal is the collaboration in developing Pakistan's substantial but largely untapped oil reserves. A US oil company is soon to be selected to lead the partnership. This venture could lead to greater energy security, infrastructure investment, and enhanced foreign direct investment (FDI) inflows. Improved energy resources and infrastructure are positive for the overall economy and investor confidence, likely benefiting relevant sectors listed on the PSX.
The agreement is also seen as a deepening of bilateral trade and investment ties, with expectations of increased US investment in Pakistan’s infrastructure and development projects. This can improve economic prospects and financial market sentiment.
On the PSX, the KSE-100 settled above 142,000 level for the first time in history on Monday, reaching an intra-day high of 142,323.34 during the trading session. The benchmark index closed at 142,052.64, up by 1,017.66 points or 0.72%. The increased trading volume, with 482 companies traded, also indicates investor optimism about the deal's potential impact.
However, it's important to note that specific short-term market movements would depend on details of deal implementation, investor perceptions, and broader economic conditions. The July payrolls report showed that revisions meant payrolls were 290,000 below where investors had thought they would be, which could potentially impact confidence in the short term.
In summary, the US-Pakistan trade deal's reduction in export tariffs combined with joint oil development initiatives is expected to bolster Pakistan's trade balance, stimulate economic growth, and enhance investor sentiment on the PSX, strengthening the overall economy. As the deal unfolds, it will be interesting to see how these expectations translate into long-term economic benefits for Pakistan.
Meanwhile, the Pakistani rupee maintained its upward trajectory against the US dollar, appreciating 0.02% during trading in the inter-bank market on Monday, settling at 282.66. The value of shares declined to Rs42.92 billion from Rs50.55 billion in the previous session, with B.O.Punjab and Pak Int.Bulk being among the highest volume leaders.
Asian share markets followed Wall Street lower on Monday due to fears for the US economy, which could potentially impact investor sentiment globally. Despite this, the overall outlook for the Pakistani economy and the PSX remains positive due to the US-Pakistan trade deal.
- The US-Pakistan trade deal, by lowering tariffs on Pakistani products to 19%, has provided an advantage for Pakistan in the South Asian region compared to countries like Vietnam and India.
- The collaboration in developing Pakistan's oil reserves, as a result of the deal, could lead to improved energy security, infrastructure investment, and enhanced foreign direct investment (FDI) inflows, positively impacting the overall economy.
- On the Pakistani Stock Exchange (PSX), the KSE-100 index showed optimism about the trade deal's potential impact, with increased trading volume and a closing above 142,000 level.
- The agreement has the potential to strengthen the overall economy by bolstering the trade balance, stimulating economic growth, and enhancing investor sentiment on the PSX, but the specific short-term market movements would depend on factors such as deal implementation details, investor perceptions, and broader economic conditions.
