The previous round of negotiations, brokered by Pakistan’s Prime Minister Shehbaz Sharif and army chief Asim Munir, had failed to yield a peace agreement.
US President Donald Trump said on Tuesday that talks to end the conflict involving the US, Israel, and Iran could resume in Pakistan within the next two days. This follows a breakdown in negotiations over the weekend that led Washington to impose a blockade on Iranian ports. The prospect of renewed dialogue has raised hopes of a resolution that could restore crude and fuel flows.
Trump said his administration had received a call from Iran expressing willingness to negotiate. Speaking at the White House, he said, “They’d like to make a deal very badly,” while reiterating that Iran’s nuclear programme remains the key sticking point and asserting that Iran will not be allowed to acquire nuclear weapons.
As a result of possible de-escalation, oil prices declined for a second straight day on Wednesday, as expectations grew that the US and Iran could return to negotiations, potentially easing supply constraints from the Middle East following concerns over the Strait of Hormuz.
Pakistan’s markets have been highly volatile in recent sessions. The KSE-100 index had surged over 12,000 points last Wednesday, marking its biggest intraday gain in absolute terms, after news of a temporary ceasefire between the U.S. and Iran boosted investor confidence. Despite that rally, the index still ended last week down more than 1%.
The volatility continued this week. The index plunged over 6,000 points on Monday after talks collapsed over the weekend, before recovering part of those losses in Tuesday’s session.Christopher Wood, global equity strategist at Jefferies, continues to view Pakistan as a high-beta opportunity linked to IMF support, even as he remains marginally positive on India over the long term. Known for his constructive stance on India, Wood noted that while Indian equities have significantly outperformed Pakistan over the decades, the latter can deliver sharp returns during phases of macro stabilisation.
He explained that Pakistan’s equity market tends to benefit during periods when IMF bailout programmes help restore economic stability. According to him, such phases often create strong trading opportunities as investor sentiment shifts from extreme pessimism to cautious optimism.
Citing the latest IMF programme agreed in September 2024, he pointed out that the MSCI Pakistan Index has risen 84% in US dollar terms since then. Over the same period, Pakistan has outperformed the MSCI India index by 124 percentage points in dollar returns, illustrating the sharp upside potential when market sentiment improves.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)