PSX bleeds on Iran-US War, rescued by overseas
KARACHI (Staff Report): Foreign investors have withdrawn approximately Rs100 billion from the Pakistan Stock Exchange (PSX) amid the Iran–US war and escalating geopolitical tensions in the Middle East, while overseas Pakistanis have emerged as a significant source of support for the domestic equity market, according to data from the National Clearing Company of Pakistan Limited (NCCPL).
The data shows that overseas Pakistanis purchased shares worth Rs24.93 billion during the period from February 26 to October 16, helping offset a substantial portion of the selling pressure generated by foreign investors. Their participation reduced the net outflow from the stock market to Rs75.42 billion, compared with the gross foreign selling of approximately Rs100 billion.
In dollar terms, the net outflow from the Pakistan Stock Exchange during the period amounted to approximately $271 million, highlighting the impact of international developments on foreign investment flows into Pakistan’s equity market.
The figures underscore the contrasting investment behaviour of foreign institutions and overseas Pakistani investors during a period marked by geopolitical uncertainty, heightened risk perceptions and concerns over regional economic stability.
Financial expert Sheheryar Butt told The Karachi Post, the investment figures highlight the importance of examining both foreign selling and the countervailing support provided by overseas Pakistani investors to understand the actual pressure on the stock market.
He said foreign investors’ selling during periods of geopolitical uncertainty can reflect a reassessment of risk, portfolio adjustments and a preference for reducing exposure to markets perceived as vulnerable to regional developments. However, the available figures alone do not establish that the Iran–US conflict was the sole reason for the withdrawals.
The Pakistan Stock Exchange, like other emerging markets, can be affected by changes in global investor sentiment, international capital movements, exchange-rate expectations and concerns about energy prices. Any prolonged escalation in the Middle East could further influence investors’ assessment of Pakistan’s economic outlook, particularly because of the country’s exposure to imported energy and external financing requirements.
Overseas Pakistani investors, meanwhile, provided an important counterweight to foreign selling. Their net share purchases of Rs24.93 billion helped absorb part of the supply entering the market and limited the overall net outflow during the period under review.
The NCCPL data also showed that foreign individuals remained net sellers, recording net sales of Rs480 million. This indicates that selling pressure was not confined exclusively to foreign institutional investors, although the scale and motivations of individual investor transactions may differ.
In the debt market, overseas Pakistanis invested Rs190 million during the same period, according to the NCCPL. While considerably smaller than their equity-market purchases, the investment represents an additional flow of overseas Pakistani capital into Pakistan’s financial markets.
The figures present a mixed picture for the country’s capital market: substantial foreign selling on one side and continued buying by overseas Pakistanis on the other. Although the latter helped cushion the impact, the net outflow of Rs75.42 billion indicates that overseas buying was insufficient to fully compensate for foreign investors’ withdrawals.
Market participants continue to monitor foreign portfolio flows, overseas Pakistani participation and developments in the Middle East for indications of whether selling pressure intensifies or investor confidence begins to recover.
The NCCPL figures cover the period from February 26 to October 16 and reflect investment flows during that period. They should not be interpreted as evidence that all foreign investors have exited the market or that the entire outflow resulted exclusively from the Iran–US conflict.