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Pakistan Strategy: Elections 2018 - Fence sitters remain a major swing factor

  • The stage is all set for a closely fought, high stakes elections due on 25th-Jul’18, where a total of 3,675 candidates will contest the elections on 270 seats (including seats where elections have been cancelled).
  • Our base-case view is of a coalition government led by Pakistan Tehreek-e-Insaf (PTI), where the party would need 137 seats of the lower house (simple majority) to lead the show.
  • Voter turnout is set to increase given the trends seen in the past elections. Punjab is expected to be the key battle field, Karachi, FATA and independent candidates may serve as the key swing factors to the overall result.
  • The important considerations include: (i) undecided voters (quantum is significant in the Punjab), (ii) party defections (more in PML (N) than PTI), and (iii) impact of Mr. Nawaz’s decision to return to country to serve the jail-term.
  • We continue to see charged-up political environment post-elections and expect the market to trade in the range of 7x (a worst-case scenario) and 7.8x (base-case scenario). Our top five picks are: PPL, HUBC, NCL, MCB, and EFERT.
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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