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The currency is relatively stable
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Foreign exchange reserves are no longer in free fall
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Inflation has moderated from crisis peaks
However, beneath this surface lies a set of structural pressures that directly shape PSX behavior.
Persistent External Stress
Trade data through late 2025 shows a widening cumulative trade deficit despite monthly volatility. Exports remain structurally weak, while imports stay sticky due to energy needs, food inflation, and industrial inputs. This imbalance does not collapse markets overnight—but it limits policy flexibility.
The implication for PSX is critical:
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Policymakers cannot afford sudden shocks
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Interest rates may come down slowly, not sharply
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Subsidy-heavy or import-dependent sectors remain exposed
High Rates Are Still the Anchor
Even if the interest rate cycle turns marginally accommodative, Pakistan remains a high real-rate economy by global standards. This has two direct effects on equities:
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Valuation multiples remain capped
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Leverage becomes a silent risk amplifier
This environment naturally shifts capital preference away from speculative growth toward durable cash generators.
Why Capital Preservation Becomes the Dominant Theme
Markets are not driven by optimism alone; they are driven by risk-adjusted survival.
In a capital-preservation phase, investors prioritize:
