Late‑January SECP reforms, customs/tax changes, port and trade upgrades and record gold price movements

Pakistan’s economic landscape in early 2026 continues to demonstrate a robust momentum of reform and resilience amid external uncertainties. Recent developments spanning regulatory upgrades, capital market dynamics, commodity fluctuations, trade modernization, and sectoral advancements underscore the government’s unwavering commitment to transforming the country into a more competitive, transparent, and sustainable economy. These initiatives, especially the late-January reforms, reflect a strategic blend of institutional strengthening, market liberalization, and macroeconomic stabilization efforts.

Institutional and Regulatory Reforms Gain Momentum

The Securities and Exchange Commission of Pakistan (SECP) remains at the forefront of the reform agenda. Building on its previous initiatives, recent appointments and policy measures aim to enhance oversight and foster investor confidence:

• Leadership Enhancement: The appointment of Sohail Sarfraz as SECP Commissioner brings extensive industry expertise, with a focus on enforcement, compliance, and investor protection. His leadership is expected to elevate Pakistan’s corporate governance to meet international standards.
• Expanded Oversight: The addition of a fifth commissioner strengthens the SECP’s capacity to supervise diverse sectors, ensuring more comprehensive regulation.
• Digitization of Share Ownership: The ongoing second phase of share ownership digitization, targeting unlisted companies, has significantly reduced transfer delays, curbed fraud, and boosted transparency, facilitating easier access for investors.
• Corporate Registry Cleanup: The identification and removal of 24,958 inactive companies, including 125 foreign firms that have exited, serve to streamline the corporate ecosystem and improve data accuracy.
• Market Integrity Measures: The SECP is actively drafting regulations to combat multi-level marketing (MLM) and pyramid schemes, protecting investors and promoting a healthier investment climate.
• Shariah Compliance: The revision of Shariah screening criteria for the PSX-KMI All Share Index aligns Pakistan’s equity markets with Islamic finance principles, broadening appeal among domestic and international investors.

These measures collectively aim to create a more transparent, efficient, and investor-friendly regulatory environment, further attracting both domestic and foreign capital.

Capital Markets: Navigating Volatility and Introducing Innovations

Despite recent turbulence, Pakistan’s stock markets have shown resilience and adaptability:

• The KSE-100 Index experienced a sharp decline of over 1,060 points on February 23, 2026, driven by regional geopolitical tensions and external shocks. However, the market quickly rebounded, with a single-session rally exceeding 5,700 points in late January, reflecting renewed optimism fueled by ongoing reforms.
• Continued volatility persists, with intra-day swings often exceeding 2,500 points, highlighting external uncertainties’ influence.
• The introduction of a T+1 settlement cycle—the fastest in the region—has been successfully implemented. This reform facilitates faster transaction processing, reduces settlement risks, and aligns Pakistan with global best practices.
• New listings such as Pak-Qatar General Takaful and the Signature Residency REIT are broadening sector participation and attracting retail investors.
• Regulatory enhancements include research analyst registration and proposals for algorithmic trading rules aimed at curbing misinformation and fostering discipline in trading practices.
• Sector-specific developments, such as Jazz International’s acquisition of TPL Insurance and robust earnings from Ghandhara Automobiles, signal underlying sectoral strength despite market volatility.

These innovations and sectoral activities demonstrate Pakistan’s efforts to deepen market depth, improve transparency, and attract diverse investment sources.

Commodities and Macroeconomic Dynamics: Gold’s Volatile Surge

A defining recent phenomenon has been the record surge in gold prices, which reached an all-time high of Rs551,662 per tola on January 28, 2026. This spike was primarily driven by geopolitical tensions, inflation fears, and economic uncertainty, prompting investors to seek safe-haven assets.

However, this rally proved short-lived; within three trading sessions, gold corrected by approximately 18%, illustrating the volatile and speculative nature of current markets. Similar patterns emerged in silver and other industrial metals**, which temporarily hit historic highs before retreating, revealing the influence of global macroeconomic factors.

The State Bank of Pakistan (SBP) has actively managed liquidity through Rs13.6 trillion in reverse repos and open market operations, aiming to stabilize forex reserves and control inflation. External liabilities remain significant, exceeding $31 billion, underscoring the importance of fiscal discipline and sustained international support.

Engagements with international financial institutions, including Prime Minister Shehbaz Sharif’s recent discussions with World Bank President Ajay Banga, continue to focus on debt management and macro stabilization, highlighting the ongoing reliance on external support for economic stability.

Trade, Customs, and Tax Reforms: Modernization and Revenue Gains

Pakistan’s modernization efforts in trade and taxation infrastructure have gained significant traction:

• Customs valuation rulings such as VR-2034/2026 for motorcycle parts and VR No.1/2026 for rice streamline export valuation procedures, reduce disputes, and enhance trade predictability.
• The elimination of local valuation agents involved in vehicle valuation aims to reduce delays and costs, thus increasing the automotive sector’s competitiveness.
• The digitization of sales tax collection via the Central Control Unit (CCU) has improved compliance, detected leakages, and boosted fiscal revenue. In the first seven months of FY26, Pakistan collected Rs7.18 trillion, reflecting the effectiveness of these digital reforms.

These measures collectively foster a more transparent and efficient tax system, encouraging compliance and enhancing revenue streams.

Sectoral Developments and Corporate Growth

The corporate landscape continues to evolve with notable sectoral progress:

• The NBFI/NBFC sector assets have reached Rs6.84 trillion as of December 31, 2025, indicating sustained growth in non-bank financial intermediation.
• Merit Packaging turned profitable in the first half of FY26, reporting a net profit of Rs129.46 million, demonstrating resilience amid challenging conditions.
• Citi Pharma has secured SECP approval to establish a REIT management subsidiary, with plans to develop three real estate investment projects. This marks a significant expansion into real estate finance, diversifying Pakistan’s financial sector and attracting institutional investors, as detailed in recent reports by Business Recorder.

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Outlook: Continued Reform Momentum Amid External Risks

Pakistan’s reform trajectory remains vigorous, with ongoing efforts to enhance institutional capacity, market modernization, trade facilitation, and macroeconomic stability. However, external factors—such as geopolitical tensions and global economic volatility—continue to influence investor sentiment, often resulting in extreme intra-day swings.

The record gold prices and their subsequent corrections exemplify the volatile interplay between global risks and domestic policies. While the government’s comprehensive reform agenda is designed to foster long-term resilience and growth, success hinges on policy execution, international cooperation, and market confidence.

In sum, early 2026 developments showcase Pakistan’s proactive approach to transforming its economic landscape, aiming for inclusive and sustainable growth despite external headwinds. The coming months will be critical in determining whether these reforms translate into steady recovery and stability, setting a foundation for future resilience.

Pakistan’s reform journey persists, with strong foundations laid. Continued focus on policy execution, external engagement, and market stability will be essential for realizing its full economic potential.