Leverage Without Cash Flow
Companies that rely on refinancing rather than internal cash generation face rising pressure as capital tightens. These businesses often look stable—until they are not.
In preservation phases, leverage is not punished loudly. It is punished quietly through underperformance.
Scenario Framework: How to Think About 2025–26
Rather than predicting prices, it is more useful to think in scenarios.
Base Case (Most Likely)
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Gradual rate easing
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Continued IMF alignment
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Selective sector rotation
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Modest index movement with high dispersion
Upside Case
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Faster rate cuts
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External inflows improve
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Banks and cyclicals outperform temporarily
Downside Case
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External shock or policy slippage
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FX pressure returns
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Capital retreats into defensives
Notice what is missing from all three cases:
There is no broad speculative boom.
What Investors Commonly Misunderstand
Many PSX participants confuse price movement with opportunity.
In capital-preservation phases:
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Flat markets can still reward discipline
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Volatility punishes impatience
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Missing rallies is less damaging than riding drawdowns
This is why institutional capital often appears “late” but outperforms over time.
Retail investors, by contrast, tend to:
