KARACHI: Pakistan’s benchmark KSE-100 index recorded its largest-ever single-day decline on Monday, plunging 16,089 points, or 9.57 percent, to close at 151,973, as escalating conflict in the Middle East triggered panic selling and forced a temporary trading halt.
The selloff followed weekend strikes by the United States and Israel inside Iran and Tehran’s retaliation targeting US bases in Gulf states and Israel, raising fears of broader regional instability and disruption to global energy supplies.
The Pakistan Stock Exchange (PSX) confirmed that trading was suspended shortly after the open after a 5 percent decline in the KSE-30 index triggered an automatic market halt under exchange regulations. All equity markets were temporarily suspended at 9:22 a.m., with trading resuming later in the morning .
“Due to the evolving nature of the conflict and involvement of various countries, the volatility may continue till the resolution or de-escalation of this conflict,” Topline Securities said in a note to clients.
The brokerage said the steep correction was driven by widespread panic selling from both retail and institutional investors, compounded by previously overbought conditions.
Heavyweight stocks including Fauji Fertilizer Company, United Bank Limited, Engro Holdings Limited, Hub Power Company and Meezan Bank exerted significant downward pressure, collectively eroding 5,167 points from the benchmark index.
Despite the sharp fall, trading activity remained elevated. Total market volume reached 809 million shares with turnover of Rs. 48.5 billion, while K-Electric led volumes with more than 163 million shares traded.
Oil prices rose 6–7 percent in the latest session and are up about 15 percent over the past seven trading sessions amid mounting concerns over potential disruption to the Strait of Hormuz, a strategic waterway that handles roughly one-fifth of global oil shipments.
Although Pakistan is not directly involved in the conflict, its economy is highly exposed to energy price shocks. The country imports an estimated $15–16 billion worth of petroleum products annually. Every 10 percent increase in oil prices could raise the import bill by approximately $1.5–1.6 billion, according to Topline.
Higher oil prices could also feed into inflation.
“Every 10 percent increase in crude oil prices may elevate inflation estimates by 40–50 basis points,” Topline said.
Business leaders warned that the risks extend beyond oil.
Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), called for urgent government intervention to shield the economy from fallout.
“Ongoing geopolitical volatility – particularly the disruptions in the Red Sea and the Strait of Hormuz – poses a severe threat to Pakistan’s fragile economic recovery, energy security and export competitiveness,” he said in a statement.
He warned that nearly 30 percent of global petroleum consumption passes through the Strait of Hormuz and that any prolonged disruption could trigger supply chain shocks.
Freight costs on key shipping routes could surge by up to 300 percent, while war-risk insurance premiums have already spiked, threatening export competitiveness, particularly for textiles and manufacturing, the FPCCI said.
The chamber urged the government to build petroleum reserves and finalize contingency supply arrangements with key allies to ensure uninterrupted energy flows.
Adnan Sami Sheikh, vice president research at Pakistan Kuwait Investment Company Ltd., however, also described the market reaction as excessive.
“Trading at the bourse halted after the market crashed 15k pts / 9 percent at the open, as investors who posted sell orders / redemptions desperately tried to find liquidity. The reaction is largely overblown with most GCC markets which are open only falling by a few percent while neighboring Asian markets are also unphased,” Sheikh said.
With Monday’s decline, the KSE-100 has fallen about 19 percent from its January high of 189,000 points and is now trading below 6.5 times projected 2027 earnings, compared with a historical average of 6.9 times.
Investors are closely monitoring developments in the Gulf, particularly around energy routes and further retaliatory actions, as the conflict’s trajectory remains uncertain.
