Stocks 📊, Policy 🏛️, Growth 🚀

Another Week, Another Pulse!

Between the Pak-India match hype and Ramadan preparations picking up around the world, the news cycle quietly delivered a week full of developments that could shape Pakistan’s economic trajectory. Some signals pointed toward recovery, others reminded us that stability is still a work in progress.

PIA returned to the spotlight, but this time the conversation moved beyond survival. The consortium led by the Arif Habib Group announced plans to acquire the remaining 25 percent government stake, aiming for full control of the airline. There are also discussions around listing PIA on the Pakistan Stock Exchange within a year of operational takeover. For an airline that has struggled financially for years, even the idea of a market listing signals a shift toward a more commercially driven future.

Meanwhile, policymakers are preparing a new round of tax reforms focused on simplifying the system and making it more investment friendly. The intention is clear. Strengthen industry, boost exports, and attract capital. The challenge, as always, will be translating policy announcements into real change on the ground.

Foreign investors showed renewed interest in January, with Pakistan recording its largest monthly net foreign inflows into sovereign bonds in 19 months. Net inflows reached $176 million, mostly directed toward short term bonds. It reflects cautious confidence. Investors are watching again, but they are still moving carefully.

Pakistan also repaid a $700 million Chinese commercial loan, temporarily reducing foreign exchange reserves to around $15.5 billion. The next decisions around bilateral deposits will be important because they will shape how much flexibility policymakers have in managing external pressures.

Inflation delivered mixed news. Weekly inflation rose 4.26 percent year on year, yet short term price pressures eased due to declines in some key food items. For consumers, it feels like small pockets of relief rather than a full turnaround.

On the industrial front, a Chinese firm is likely to invest $800 million into the Integrated Maritime Industrial Complex at Port Qasim. The project includes a sea to steel initiative along with shipbreaking and maintenance facilities, highlighting continued interest in long term industrial infrastructure.

Exporters received a boost as the banking sector voluntarily reduced export financing rates by 3 percent, bringing the markup under the Export Refinance Facility down to 4.5 percent. Lower financing costs could help exporters remain competitive and support foreign exchange earnings.

Remittances remained a strong pillar, reaching $3.46 billion in January. At the same time, climate change remains a growing economic reality. Pakistan is estimated to lose close to 1 percent of its GDP annually due to climate related damage, despite contributing less than 1 percent to global emissions. The financial cost of environmental vulnerability is becoming impossible to ignore.

State Bank Governor Jameel Ahmad expressed optimism about growth prospects, projecting economic expansion of up to 4.75 percent this fiscal year despite a recent IMF downgrade. Whether this optimism translates into sustained momentum will depend on reforms, stability, and global conditions.

One unexpected bright spot came from the auto sector, where vehicle sales reached a 43 month high in January. Interestingly, after strong inflows in January, foreign investment slowed in early February, with treasury bills seeing no new inflows. Analysts believe this reflects shifting global risk appetite rather than domestic weakness.

Looking ahead, the government announced plans to invest $1 billion in artificial intelligence by 2030, signaling recognition that future growth will increasingly depend on technology and innovation.

🎧 Tune in to this week’s Pulse:

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Pakistan’s stock market had a rough ride last week. The benchmark KSE-100 index dropped 4,526 points, or 2.46 percent, closing at 179,604. Investors grappled with heightened volatility, weaker-than-expected corporate earnings, and lingering concerns over developments related to the Reko Diq mining project.

PSX Successfully Transitions to T+1 Settlement Cycle

Pakistan’s stock market has officially moved to a T+1 settlement cycle, meaning trades are now settled the next day instead of two days later. Effective February 9, 2026, this reform reduces risk, improves liquidity, and speeds up the market, aligning Pakistan with advanced markets like the US, China, and Canada. The faster settlement not only strengthens confidence among domestic and foreign investors but also positions the market for further modernization and more efficient capital flows in the future.

Soneri Bank Explores Potential Acquisition to Diversify Its Business

Soneri Bank has authorised its CEO to explore a potential acquisition as part of efforts to diversify its business. The plan is still at an early stage and will proceed only after due diligence, negotiations, regulatory approvals, and other standard requirements are completed.

IMF Mission to Visit Pakistan for 3rd Review of $7 Billion Program 

An IMF review mission is expected to visit Pakistan in the last week of February for the third review of the $7 billion Extended Fund Facility, including discussions on the release of a $1 billion tranche. Talks will also cover the second tranche under the Resilience and Sustainability Facility and are expected to influence key aspects of the 2026–27 federal budget, including fiscal and budgetary planning. Preparations are already underway by the Ministry of Finance and FBR ahead of the mission.

Pakistan Delays $250 Million Panda Bond Issuance Again

Pakistan has postponed the $250 million Panda bond issuance again, marking the fourth delay this fiscal year. The Ministry of Finance cited incomplete preparations and is now aiming for a launch next month, though no date has been confirmed. The delay comes amid rising external repayment pressures, including $1.2 billion in Eurobonds maturing in April 2026.

Moody’s revises Pakistan banking sector outlook from positive to stable 

Moody’s has revised Pakistan’s banking sector outlook from positive to stable, citing a slow but steady economic recovery and ongoing pressures from high interest rates, credit risks, and government financial challenges. The agency projects GDP growth of 3.5 percent in 2026 but flagged external financing and inflation risks, along with potential policy implementation hurdles, as key factors for the sector’s stability.

Pakistan’s Debt Hits Rs. 78.5 Trillion Amid Rising Expenditure in FY26

Pakistan’s central government debt reached Rs. 78.5 trillion in December 2025, up 9.6 percent year-on-year. Spending in the first half of FY26 hit Rs. 10.14 trillion, with debt servicing and defence as the largest outlays, while total revenue stood at Rs. 10.68 trillion, supported by tax collections and Rs. 2.43 trillion from the State Bank of Pakistan. Despite higher spending, the government maintained a primary surplus of Rs. 4.11 trillion before interest payments.

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_{Today’s Pulse by Capital Stake is brought to you by Hubab Irfan}