KSE-100 – jitters? What jitters?

Some things happen for a reason; though, it’s another thing that the reasons are not always well known. The benchmark KSE’s relationship with general elections in Pakistan is a similar story.
If one tracks KSE-100’s movement 60 days before each of the last three elections, a certain identifiable trend begins to emerge. The index does not necessarily fall due to pre-election jitters. It only undergoes a temporary mid-journey correction, which for some odd reason always roughly falls between 27 and 22 days before the election.
Even if the market starts falling before the mid-journey correction, the index always bottoms out between 15 and 19 days before the respective election dates. And after that it resumes its upward journey right up until the day of election.
A similar coinciding trend is visible if one plots 100-index’s movement from the day of the announcement of the date of each general election to the actual day of the election.
A look at the relevant graph shows that the benchmark always bottoms out roughly 20-22 days after the date of the announcement of the general election. And then it continues its northward journey up to the day of the election.
The exception to these is the movement before the elections of 2008, when the index saw a sharp slide well before the conventional mid-journey correction. But that was essentially a jolt and not a jitter, explained by the assassination of the former premier and PPP party leader Benazir Bhutto.
What exactly lies behind this strange coincidence of bottoming out in the same time frame may not have a completely logical answer. One might as well attribute it to the collective wisdom of the market. But the message from these trends is pretty clear.
The so-called pre-election jitters for May-2013 general elections are most likely over. And that yesterday’s slide may just be a temporary adjustment. This is unless of course some untoward circumstances lead to a delay in elections (as it happened in 2008).
But even if that happens, one can reasonably conclude that elections offer enough hope to investors which pushes KSE-100 to higher grounds.