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Pakistan Strategy: Elections 2018 - A relief rally likely on favorable results

  • We are cautiously optimistic on results of Elections 2018. In a clear positive development, Pakistan Tehreek-e-Insaf, led by Mr. Imran Khan, has emerged with near-simple majority, securing 113 seats (¬41% of total). PTI may have to form a coalition government in the center with the support of small parties/independents.
  • PTI has also consolidated its position in provincial assemblies. The party is set to form government in KPK with a simple majority, and stands as a close runner up in the Punjab, Pakistan’s largest province. Possibility of forming a coalition government in Punjab remains.
  • Overall, results of Elections 2018 clearly bode well for the stability of future government and provides supportive environment for policy making. A relief rally (4-6%) in the equity market seems on the cards as prospects of hung parliament are avoided (average 8% return in 1-Mth post elections since 1993). Controlling the twin deficits remains a single largest challenge to the new government.
  • Results of the elections lack acceptance by major/small political parties, including Pakistan Muslim League (N).
  • We continue to see charged-up political environment post-elections. At this stage, prospects of unified stand by PML (N) & other parties on election day’s alleged irregularities remain and may keep the excitement in check.
Provider
BMA Capital Management Limited
BMA Capital Management Limited

​BMA is amongst the leading financial groups in Pakistan. BMA Capital’s core areas of business include Capital Markets, Corporate Finance & Advisory, Asset Management, and Financial Products Distribution. BMA Capital is the leader in privatisation advisory in Pakistan, having successfully advised on over 50% of all privatisations in Pakistan, by value, in transactions valued in excess of US$4 billion. Recent transactions include joint lead managing the $813 million GDR Offering of 10% of OGDCL on the London Stock Exchange in 2006-07, and advising Etisalat on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistan’s history. The firm is among the top brokers in the Pakistan equity and treasury markets, and is among a handful of firms that comprehensively cover all segments of the capital markets. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media. BMA Capital’s retail brokerage brand, BMA Trade, has launched a nationwide network of branches as well as a comprehensive online trading platform, enabling investors across Pakistan to take part in the capital markets.

Analysts
Fawad Khan

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