Report

Pakistan Politics: PTI Likely To Lead The Electoral Battleground

  • Pakistan will be gearing up for its second consecutive democratic government transition later this month. Observant and political experts term the upcoming polls (on July 25, 2018) as one of the most toughest and tightly contested elections in Pakistan’s history.
  • Based on our analysis, we believe that there will be a neck to neck contest between PML-N and PTI. However, there is 75% probability that the new coalition Govt. will be led by PTI along with independents and smaller parties. Since it will be a close contest, there is a 25% likelihood that PML-N forms a coalition Govt. with PPP and other parties and independents.
  • In a poll of leading Corporates and Fund Managers, 77% believe PTI to lead the next govt. and were equally split between PML-N and PTI as to who will get the highest number of seats.
  • In another poll of top political experts, 75% of respondents were of the view that PTI will form the next govt. with 71% stating that PTI likely to have highest number of seats.
  • In Gallup’s last National Polls conducted in Mar 2018, PML-N remained the favorite among the public with 36% popularity followed by PTI with a popularity of 24%. PML-N popularity before 2013 poll was 41% and PTI 14%.
  • Electables are expected to play an important role in upcoming elections. History suggests that influential and rich candidates from different rural constituencies can significantly impact the final results as party is important in cities while person is key in villages. It is for this reason that PTI has fielded some strong candidates who enjoy popular standing in their respective constituencies.
  • Besides many electables joining PTI, the on-going investigation against key PML-N lawmakers along with news of media censorship will also help PTI. International media and PML-N are also criticizing it and terming it political engineering.
  • Some sections of media are deliberating whether corruption cases against Nawaz Sharif and his family could lead to sympathy among voters. While PML-N gaining sympathy votes cannot be ruled out in the general elections of 2018, we believe that it may not drastically alter our forecast of PML-N winning 80-90 seats.
  • We do not anticipate religious parties to post major threat in upcoming 2018 general elections despite their announcement to unite under the banner of Muttahidda Majlis-e-Amal (MMA). This is because, contrary to perception, except for 2002 elections, religious parties did not gain more than 5-6% of seats.
  • Though in a coalition Govt., making rules will be difficult but looking at past trend, we conclude that the economy of Pakistan and stock market have no correlation with the structure of the Govt. (whether majority or coalition).
  • Based on our analysis and taking cue from our poll of market participants, we estimate Pakistan KSE-100 index to go as high as 48,000 in case of PTI led Govt. while the index may go up to 50,000 if PML-N leads. The reason for a post elections rally will be political stability and Pakistan’s likely entry into an IMF program. Lower upside of the index in case of PTI is owing to uncertainty over its economic policies while in case of PML-N, market is expected to show higher level of confidence.

 

Provider
Topline Securities Limited
Topline Securities Limited

Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.

Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.

Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.

JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).

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