Pakistan’s FDI data for Feb-26 and 8MFY26 offer only limited reassurance. February was reasonably constant, with net inflows of $213.5 million, but the broader trend remains weak. During 8MFY26, net FDI fell to $1.19 billion from $1.79 billion in the same period last year—a decline of about one-third. So, while monthly numbers have improved from earlier volatility, the overall picture remains fragile, concentrated, and narrow. Gross inflows in Feb-26 stood at $330.5 million, while outflows were $117 million. That suggests foreign investors were not pulling back across the board and repatriation pressures remained contained for the month. But one decent month does not change the larger pattern. Pakistan’s monthly FDI numbers remain modest and rarely move into a range that would signal a meaningful shift in investor confidence. The sectoral mix reinforces that point. In February, power was the largest contributor, led by hydel and coal. Financial business and electronics also posted positive inflows. By contrast, communications recorded a net outflow, largely due to repatriation pressures in telecom. That remains one of the recurring weaknesses in Pakistan’s FDI profile: sectors that should be attracting fresh capital often end up showing stress through withdrawals, or heavy profit repatriation. The eight-month picture is more telling. Gross inflows fell sharply year-on-year, while outflows declined only slightly, leaving the country with a much weaker net FDI. Power remained the single largest destination for FDI, but even those inflows were substantially lower than last year. Financial business held up relatively well and was one of the few areas showing resilience. The biggest drag came from communications, where net FDI turned deeply negative. The country composition is even more concerning. China and Hong Kong together accounted for roughly 72 percent of total net FDI in 8MFY26 – mostly in the power sector. Meanwhile, contribution from the rest of the world remains thin. This is where the weakness becomes structural. Much of the China- and Hong Kong-linked investment is concentrated in sectors already tied to bilateral commitments, especially power. That keeps headline FDI numbers alive, but it does not create the diversified investment base needed for industrial upgrading and export growth. The continued weakness in flows from Western economies and other Asian partners reinforces that concern. The outflow side also deserves attention. Norway, Malta, and Germany posted sizable net outflows during the eight-month period, offsetting a meaningful share of gains from other countries. These exits, or repatriations, matter not only because they depress the headline number, but because they underline an uncomfortable truth: attracting capital is only part of the challenge; retaining investor confidence is equally important. The deeper problem is that Pakistan’s FDI mix still lacks diversification. Power dominates. Financial business is significant but sensitive to macroeconomic conditions. A few smaller positives have appeared in electronics, electrical machinery, food, and refining, but the overall portfolio remains narrow. Manufacturing, technology, logistics, and export-oriented sectors still do not feature strongly enough. Moreover, risks keep mounting: external pressures, energy costs, tax distortions, regulatory friction, and policy unpredictability continue to weaken Pakistan’s investment appeal. And then there is the ongoing geopolitical situation that warrants attention. Going forward, the Iran war and Pakistan’s tensions with Afghanistan could darken the outlook further. The escalation in Iran has shifted the regional investment climate from recovery to risk aversion, undermining the Gulf’s safe-haven appeal through rising insurance costs, disrupted logistics, higher energy prices, and delays in major projects – and thus overall investor sentiment. For Pakistan, renewed friction with Afghanistan adds to concerns around border security, trade routes, and policy predictability. The combined effect is likely to be a higher risk premium for Pakistan, slower investor decision-making, and a broader regional slowdown in FDI as capital moves away from conflict-exposed markets toward safer destinations.