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strikeApr 13, 2026

Stocks sink, Iran move falters: Pakistan is a high-beta nation

Summary

A stock rally and diplomacy, both built only on hope Pakistan’s equity markets had surged dramatically the previous week, buoyed by news of a temporary ceasefire between the US and Iran and the country’s unexpected role as host of high-stakes negotiations. The rally, which added over 12,000 points to the benchmark index, reflected not just optimism about regional stability but also renewed investor confidence tied to IMF-backed reforms and external inflows. That optimism proved short-lived. As ceasefire talks in Islamabad failed to yield a concrete agreement, sentiment reversed sharply. The KSE-100 index plunged nearly 6,000 points intraday, highlighting the high-beta nature of Pakistan’s markets. The episode reinforced a familiar pattern: rallies driven by external triggers rather than structural economic improvements tend to unwind just as quickly. The failed talks also highlighted the high-beta nature of Pakistan's stature -- from being a long-time sponsor of terror, currently torn by Baloch insurgency and entangled in an armed conflict with Afghanistan, Pakistan suddenly emerged as a global peacemaker. But that moment faded quickly within days, just as the equity rally did. Pakistan’s recent market gains are largely tactical, supported by short-term liquidity and IMF discipline rather than deep-rooted economic transformation. Similarly, its sudden diplomatic rise was also based less on its structural strength and more on circumstantial factors such as Trump's admiration and utter docility of Pakistani leaders to him. Also Read | Pakistan stock markets crash: KSE 100 plunges 6,000 points as US-Iran ceasefire talks collapse Diplomacy’s fleeting spotlight For a brief moment, Pakistan occupied an unusual position at the center of global diplomacy. Hosting US-Iran talks, with US Vice President JD Vance reportedly engaging Iranian negotiators, elevated Islamabad’s profile in ways not seen in years. Both Iran and the US publicly acknowledged Pakistan’s facilitative role, and today Trump praised the leadership of Prime Minister Shehbaz Sharif and army chief Asim Munir. He said the meeting, which ended without a deal between the two countries to end the Iran war, took place through the "kind and very competent leadership" of Sharif and Field Marshal Munir. "They are very extraordinary men and continuously thank me for saving 30 to 50 million lives in what would have been a horrendous war with India," The global recognition offered Pakistan a chance to reshape an international image long dominated by the legacy of the war on terror and the 2011 killing of Osama bin Laden on its soil. Such diplomatic openings are rare opportunities for countries seeking reputational reset. Yet the absence of a deal exposed the limits of that moment. Without a tangible outcome, the symbolism of hosting talks quickly gave way to the reality of stalled negotiations. Pakistan’s moment under the sun faded almost as quickly as it appeared, mirroring the transient nature of its market rally. Also Read | Trump warns of elimination if Iranian Navy ships hinder Hormuz 'blockade' Strategic relevance beyond mediation Despite the setback, Pakistan’s importance in the evolving crisis extends beyond its role as a mediator. Its geography alone ensures that it remains deeply exposed to any escalation. Sharing a long border with Iran, Pakistan cannot remain insulated from instability next door. Any prolonged conflict risks spillover effects, from refugee flows to cross-border security concerns. Energy vulnerability further amplifies the stakes. Pakistan is heavily dependent on oil and gas supplies that transit through the Strait of Hormuz and lacks any significant buffer. Disruptions in this corridor, especially amid the US naval blockade on Iran, could have severe economic consequences. Even the threat of disruption in Hormuz tends to ripple across energy-importing economies, with Pakistan among the most exposed. Additionally, Pakistan’s defense ties with Saudi Arabia add another layer of complexity. The recent deployment of approximately 13,000 troops and a contingent of fighter jets to the kingdom under a bilateral strategic defense agreement signals a clear alignment. Under the terms of this pact, an attack on one is effectively treated as an attack on both. This not only enhances Pakistan’s strategic relevance to Gulf security but also raises the risk of entanglement should the conflict widen. The persistence of backchannel diplomacy While formal negotiations in Islamabad ended without a breakthrough, diplomatic efforts have not ceased. Prime Minister Shehbaz Sharif has indicated that talks are ongoing, even as he addressed his cabinet. Axios has reported that Pakistani, Egyptian and Turkish mediators will continue talks with the US and Iran in the coming days in an effort to bridge the remaining gaps and reach a deal to end the war, according to a regional source and a U.S. official. The Axios report said all parties still believe a deal is possible. The mediators hope that narrowing the gaps could enable another round of negotiations before the ceasefire expires on April 21. This is where Pakistan’s role retains significance. Even without a headline-grabbing agreement, the ability to facilitate continued dialogue keeps the country in the diplomatic loop. Backchannel negotiations often lay the groundwork for formal breakthroughs, and all parties reportedly still believe a deal is possible before the ceasefire deadline. The prospect of another round of talks, potentially again hosted by Pakistan, cannot be ruled out. If realised, it would offer Pakistan a second opportunity to convert symbolic relevance into substantive diplomatic capital. Pakistan’s recent experience illustrates a broader truth about its position in global affairs. Moments of prominence are often externally driven and inherently fragile, whether in financial markets or diplomacy. The same factors that elevate the country’s importance can just as quickly expose its vulnerabilities. Pakistan is a high-beta market as well as a high-beta nation. (You can now subscribe to our Economic Times WhatsApp channel) (You can now subscribe to our Economic Times WhatsApp channel)

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  • SECTIONS Stocks sink; Iran move falters Pakistan is a high-beta nation ET OnlineBy SECTIONS Stocks sink; Iran move falters Pakistan is a high-beta nation ET Online

    A stock rally and diplomacy, both built only on hope Pakistan’s equity markets had surged dramatically the previous week, buoyed by news of a temporary ceasefire between the US and Iran and the country’s unexpected role as host of high-stakes negotiations. The rally, which added

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The White House is now apparently using Russian tactics to convince the American public that the war in Iran is not, in fact, a war. When asked by reporters at the White House on Thursday whether the most intense sustained air campaign by American forces since the invasion of Iraq would be over by the midterms, Vice President JD Vance replied: “I wouldn’t call it a war.

” Vladimir Putin said much the same thing when he invaded Ukraine. Russia was not fighting a war either, the Kremlin insisted; it was merely conducting a “special military operation.” If that comparison strikes you as shocking, consider the contours of the two conflicts.

A vastly more powerful military launched a punishing offensive against a smaller, less well-equipped adversary, inflicted enormous damage without achieving a decisive resolution, and then found itself drawn into a longer, grinding conflict with no clear way out.

The motivations behind the wars may be different, and they’re playing out in different theaters, but the pattern is eerily similar. Now, so too is the attempt by those in power to control how the public understands, and even what it is allowed to call, the obvious war unfolding in front of them.

If This Isn’t a War, What Is? Let us take a moment to assess what exactly has happened since February 28, when the U.S. launched Operation Epic Fury. The opening U.S.-Israeli attack killed Iran’s supreme leader, Ali Khamenei, along with the commander of the Revolutionary Guard, the defense minister and various other senior officials.

According to the U.S. military’s own accounting, the first 38 days of major combat operations involved more than 10,200 sorties and 13,500 strikes. U.S. Central Command (CENTCOM) says those attacks damaged or destroyed more than 85 percent of Iran’s ballistic missile, drone and naval defense industrial base, while knocking out 82 percent of its air-defense missile systems.

The U.S. sent carrier strike groups and warships into the region, later imposing a military blockade on Iranian ports. Meanwhile, American and allied air defenses intercepted more than 6,000 Iranian attack drones and 1,500 ballistic missiles fired at U.

S. forces, Israel and American partners across the Middle East. More than 50,000 U.S. service members remain deployed across the region. The fighting has killed 18 U.S. service members and at least 8,000 people across Iran, Lebanon, Israel and the Gulf states.

More than 750 U.S. service members have been wounded. Last month, during a lull in the fighting, the U.S. Treasury unveiled a sanctions package likened to an “economic D-day” that is designed to make Iran an “economic outcast” and cut the adversary off from all available forms of economic support.

In the announcement, Treasury Secretary Scott Bessent openly declared that Iran had been “at war against America” for 47 years. This week, the shooting resumed; the U.S. hit targets in and around the Strait of Hormuz, and Iran blasted missiles at targets in Kuwait, Bahrain, Jordan and Iraq.

All this from an administration that almost exactly a year ago launched a rapid rebrand of the Defense Department into the “Department of War”. No boots on the ground, though, so it’s not a war, right? Tell It Kind of Like It Is Even the very best snake-oil salesman would have a hard time convincing people that the war in Iran isn’t a war.

So why is JD Vance even trying? Well, if there’s one thing politicians understand better than anyone, it’s the importance of language and rhetoric. Words have immense power; a well-written speech can unite millions of people, and a catchy slogan like Make America Great Again can come to represent an entire political philosophy.

But war is a pesky word. For one, it implies there will eventually be a winner and a loser. It also brings with it certain expectations—and some very difficult questions. What is the objective? How many people will die? When will it end? And, perhaps most dangerously of all: was it worth it?

Those are not questions the White House wants Americans to be asking. Trump built a substantial part of his political identity around ending, rather than beginning, America’s “endless wars.” When Washington and Tehran signed a memorandum of understanding in June, the White House presented it as proof that Trump’s America First approach could deliver peace without another prolonged Middle Eastern conflict.

Then the hostilities started again. Earlier this week, Trump shared a Truth Social graphic declaring that “Hormuz Oil Volumes are BACK!”, saying 18 million barrels a day were once again leaving the Strait, compared with 20 million before the war. No independent commodity tracking company or energy analyst appeared to verify Trump’s claims.

But most Americans won’t be checking tanker-tracking dashboards. What they’ll care about is the cold, hard fact that diesel hit a new record price this morning, soaring to an average of $5.85 a gallon for the first time ever. Gasoline is $4.15 a gallon on average, compared with $3.

20 at this time last year, according to AAA. The numbers on the sign at the gas station and the price on the grocery receipt aren’t affected by Trump’s tall tales, but they’ll surely affect how Americans vote at the midterms. When viewed in this light, Vance’s attempt to discourage reporters from “call[ing] it a war” begins to make sense.

A war is something that we want to end. It tends to result in a winner and a loser. And its worth is up for debate at all times. A different kind of engagement that doesn’t quite meet the threshold of war—say, a special military operation—is not exposed to the same kind of scrutiny.

Vance effectively made that case himself. “When you ask, ‘When will this end?’ You’re asking me a question like, ‘When will the Iranians stop shooting at ships?’” he said. By that logic, there is no American war—only recurring Iranian provocations that require American military responses.

That’s exactly the logic applied by Putin to Ukraine and supposed expansion of NATO. Putting the Toothpaste Back in the Tube U.S. lawmakers have repeatedly invoked the War Powers Resolution to challenge Trump’s authority to keep fighting Iran without specific congressional authorization.

The law generally gives a president 60 days after U.S. forces enter “hostilities” to secure congressional approval or bring those hostilities to an end. That makes the pauses in fighting hugely important. When the original 60-day deadline arrived in May, Trump told Congress that the temporary ceasefire reached in April meant the hostilities that began on February 28 had ended.

Defense Secretary Pete Hegseth argued that the War Powers clock could “pause, or stop” when the shooting did. That position is disputed by legal experts, but its political utility is obvious. If every new outbreak of fighting can be treated as a separate skirmish, rather than part of one continuous war, the administration can argue that a fresh 60-day clock starts each time.

Vance’s insistence that there is no continuing “war” fits neatly for an administration that has already tried to divide six months of conflict into separate periods of hostilities, interrupted by ceasefires and pauses. This brings us back to Moscow.

The Kremlin’s own linguistic trick was also about making one sprawling war sound smaller, more limited and more manageable than it really was. From the very beginning of the invasion, Putin described the war as a special military operation. Only after two years of grinding warfare did Kremlin spokesman Dmitry Peskov openly declare Russia to be in a “state of war”—and even then, he said the transformation had occurred because the “collective West” had joined the fight against Russia.

Vance is playing a similar game, but in reverse. Only now—with soaring fuel prices, mounting casualties, concerns over the military’s munitions stockpiles, and midterm elections on the horizon—is the conflict no longer a war. You can’t put the genie back in the bottle, though, and the American people aren’t stupid.

Vance and the White House may discover in November that voters are perfectly capable of recognizing a war, even when the vice president doesn’t want to call it one.

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