Mounting security concerns in Balochistan and growing uncertainty surrounding the Reko Diq project have triggered intense volatility at the Pakistan Stock Exchange (PSX), wiping out billions of rupees in market value and abruptly halting what had appeared to be a strong bullish cycle at the start of the year.
Over the past two weeks, the benchmark index has swung sharply, reflecting deep investor anxiety despite a brief but powerful rebound.
In the latest episode of On My Radar, Kamran Khan said the market had witnessed a “bloodbath” following reports of coordinated attacks in 12 cities of Balochistan in early February. He noted that in just two trading sessions, the KSE-100 Index shed more than 6,000 points amid aggressive selling pressure.
However, after days of continuous decline, the market staged a dramatic comeback, surging more than 5,700 points during intraday trade and touching 178,974 points shortly before closing - an increase of about 3.29 percent. Trading volumes also rose significantly, crossing 424 million shares, indicating renewed activity.
Despite the rebound, the broader trend remains concerning. Since February 1, nearly Rs742 billion - equivalent to $2.65 billion - has been wiped off market capitalization. Analysts say the losses reflect not only a depletion of capital but also a setback to investor confidence that had only recently begun to stabilize.
The scale and speed of the downturn have been particularly striking given the market’s earlier momentum. In January, the KSE-100 Index was approaching the historic 190,000-point level, strengthening perceptions that the PSX had entered a new growth cycle. Yet within days, sentiment shifted dramatically.
A fall of nearly 9,000 points in less than two weeks - including a single-day drop of over 6,000 points - made clear that this was not merely a technical correction but a fear-driven sell-off that even circuit breakers struggled to contain.
Investors interpreted the deteriorating security situation in Balochistan as more than a localized issue, viewing it instead as a broader investment risk. Concerns intensified after Barrick Gold informed its investors that the province’s security environment had become a serious matter. While the company stated that its supply chain remains unaffected for now, it acknowledged prevailing risks.
Barrick Mining CEO Mark Hill said the board is reviewing the Reko Diq project comprehensively, including security arrangements, development timelines and capital expenditure plans. Under the project’s ownership structure, Barrick holds a 50 percent stake, with 25 percent owned by three federal state-owned enterprises and the remaining 25 percent by the Government of Balochistan.
The company’s reservations further unsettled investors and shifted selling pressure toward heavyweight stocks. In the technology and communication sector, foreign funds pulled capital from Systems Limited and TRG Pakistan, resulting in a roughly 12 percent decline in the sector. Oil and gas majors OGDCL and PPL also faced pressure, as uncertainty surrounding Reko Diq raised broader questions about the outlook for large-scale energy investments. Mari Petroleum saw notable profit-taking during the period.
The fertilizer sector also experienced losses. Shares of Fauji Fertilizer Company (FFC) fell around 9 percent after earnings failed to meet market expectations and anticipated announcements regarding a stock split did not materialize. Meanwhile, the banking sector was not immune to the downturn. Despite solid ratings, leading banks such as UBL and HBL recorded declines of about 8 percent in market value, signaling that investors were opting to lock in gains amid fears of a potential economic slowdown.
Foreign portfolio investment continues to show sustained outflows, underscoring fragile external confidence. In fiscal year 2025, net foreign portfolio investment stood at negative $650.2 million.
At the same time, domestic industrial output remains subdued, several manufacturing units have shut down, and multiple multinational companies have exited Pakistan in recent months - developments that add to the broader economic uncertainty facing the country.
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