Within the first seven minutes of opening bell yesterday, the Pakistan Stock Exchange (PSX)was forced into a trading halt. By the close, the market had fallen 9.57 percent, its steepest single-day decline yet, as panic truly set in.
Now imagine this bloodbath from the perspective of the 38,000 or so new retail investors that entered the market since January. Dipping their toes into the proverbial pool of domestic investment trying to get ahead of their shrinking disposable incomes and claw back some of their lost financial security, optimistic and eager only to replicate the luck and good fortune bestowed upon investors in the past three years. Yesterday would have been brutal for them.
Whether they followed suit and panic sold half their portfolios at the first signs of lower locks, or used this carnage as the perfect time to buy more at dips, or just decided to wait out the storm; instead of spending money, spending time on reddit and facebook forums absorbing investing advice, and trying to get hold of their broker who conveniently called in sick. Whatever their reaction, for many fresh-faced investors, this would have been an education no webinar, podcast or brokerage report could produce.
For risk-takers, perhaps the lesson would be to avoid loading up in bulk their favourite scrips as soon as they hit a low. For the risk-averse, it is how to not get immediately intimidated by a portfolio turning red.
READ MORE: Bloodbath at PSX: KSE-100 plunges over 16,000 points amid geopolitical tensions
The market crash did not come out of the blue. Over the weekend, geopolitical tensions that had been simmering in the Middle East boiled over as Israel launched what it termed “pre-emptive” strikes against Iranian targets. Many nations caught strays. While Pakistan is not directly involved in the conflict, any major war or war-like scenario threatens to ripple through oil prices, global trade and capital flows.
The vulnerabilities here at home are familiar. Remittances from the Gulf form a cornerstone of the current account. Meanwhile, a spike in oil prices would mean a bump in the import bill and mounting inflation. Higher global inflation could suppress external demand just as domestic recovery struggles to gain traction.
However, the scale of PSX’s nosedive seems disproportional as other emerging markets did not react quite as aggressively. Market sentiment has been jittery for a while. Foreign selling and concerns around Reko Diq have kept investors on edge, and tensions along the Afghan border have only added to the malaise.
As terrible as they are, external shocks are not an aberration. Sharp corrections are intrinsic to equity investing, specially in thinner emerging markets. For the new entrants, witnessing this is a psychological opportunity—the quickest lesson about nerves, discipline, and risk appetites. Over the next few months, they will watch the market recover, perhaps not with the same aplomb as it did three years ago, and recalibrate their expectations. This was merely a rite of passage.
Copyright Business Recorder, 2026
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