BAFL 45.75 Increased By ▲ 0.65 (1.44%)
BIPL 20.22 Decreased By ▼ -0.03 (-0.15%)
BOP 5.35 Decreased By ▼ -0.05 (-0.93%)
CNERGY 4.55 Increased By ▲ 0.02 (0.44%)
DFML 15.97 Increased By ▲ 0.29 (1.85%)
DGKC 78.69 Increased By ▲ 5.81 (7.97%)
FABL 27.85 Increased By ▲ 0.70 (2.58%)
FCCL 18.86 Increased By ▲ 1.21 (6.86%)
FFL 8.98 Decreased By ▼ -0.11 (-1.21%)
GGL 12.86 Increased By ▲ 0.22 (1.74%)
HBL 111.90 Increased By ▲ 1.24 (1.12%)
HUBC 122.20 Increased By ▲ 0.68 (0.56%)
HUMNL 7.65 Increased By ▲ 0.30 (4.08%)
KEL 3.24 Increased By ▲ 0.01 (0.31%)
LOTCHEM 27.98 Increased By ▲ 0.66 (2.42%)
MLCF 42.45 Increased By ▲ 3.12 (7.93%)
OGDC 110.68 Increased By ▲ 2.68 (2.48%)
PAEL 18.89 Increased By ▲ 1.33 (7.57%)
PIBTL 5.47 Increased By ▲ 0.01 (0.18%)
PIOC 115.30 Increased By ▲ 7.30 (6.76%)
PPL 94.99 Increased By ▲ 3.24 (3.53%)
PRL 25.37 Increased By ▲ 0.49 (1.97%)
SILK 1.11 Increased By ▲ 0.03 (2.78%)
SNGP 64.50 Increased By ▲ 1.40 (2.22%)
SSGC 12.27 Increased By ▲ 0.38 (3.2%)
TELE 8.39 Increased By ▲ 0.20 (2.44%)
TPLP 13.39 Increased By ▲ 0.28 (2.14%)
TRG 84.10 Increased By ▲ 2.49 (3.05%)
UNITY 25.85 Increased By ▲ 0.10 (0.39%)
WTL 1.54 Increased By ▲ 0.02 (1.32%)
BR100 6,308 Increased By 126.6 (2.05%)
BR30 21,973 Increased By 434.1 (2.02%)
KSE100 61,691 Increased By 1160 (1.92%)
KSE30 20,555 Increased By 366.1 (1.81%)
Markets

‘Pre-election rally’: PSX has potential to reach near 50,000, says brokerage house

  • Topline Securities says assuming smooth election process and approval of the IMF tranche in November, the KSE-100 could see 8-10% rally
Published September 25, 2023

The Pakistan stock market can potentially come close to the 50,000 level near the general elections, assuming there is a “smooth election process” and the International Monetary Fund (IMF) approves the next tranche of the Stand-By Arrangement in November.

This was stated by brokerage house Topline Securities in a report released on Monday.

“We believe that the Pakistan market can potentially experience an 8-10% pre-election rally thereby, has the potential to reach near 50k assuming a smooth election process and the approval of the IMF tranche in November,” said Topline Securities.

The country’s equities market has remained range-bound in recent weeks and is currently near the 46,400 level over uncertainty around Pakistan’s economic future that has been dampened by lack of inflows from multilateral and bilateral partners. Additionally, a worsening inflation outlook and talks of a hike in interest rate had previously kept investors on the sidelines as well.

However, it got a significant push last week, after the Election Commission of Pakistan (ECP) announced that the general election would be held in the last week of January 2024.

It is pertinent to mention that the assemblies were dissolved in August 2023, and as per the Constitution, the general elections should be held in less than 90 days after the dissolution of the National Assembly.

“However, due to the new census of 2023 and the delimitation process, which was approved on August 05, 2023, by the Council of Common Interests, this delay was expected. That’s why there was uncertainty about the General Election and its timeline,” said Topline in its report.

“We think the upcoming election, the direction of the Pak Rupee and the IMF-November review are key market drivers in the short run,” it said.

The brokerage house was of the view that on the assumption of a stable PKR amid recent steps taken by the State Bank of Pakistan (SBP) and law enforcement agencies, “we may see local equities performing well ahead of elections”.

Topline mentioned that in the past, the benchmark KSE Index has posted an average gain of 8% four months before the elections.

“PSX saw a 4-month pre-election positive rally in 3 elections (1997, 2002, & 2013) out of 5, with an average return of 17%. Interestingly, in the 2008 and 2018 elections, no positive pre-election rally was seen due to economic issues.

“In total, over the last 5 elections, PSX witnessed an average 4-month pre-election return of 8%.

“Similarly, PSX witnessed a 3-month pre-election rally in 4 out of 5 elections (1997, 2002, 2008, & 2013) with an average return of 7%. In the 2-month pre-election period, PSX observed pre-election rallies in 3 out of 5 elections (1997, 2002, & 2013) with an average return of 7%.”

Meanwhile, in the last month of elections, PSX experienced an average positive return of 7% in all 5 elections, highlighted the report.

Topline shared that Pakistan’s equity market is currently trading at cheap price-to-earnings (PE) multiple of 3.9x and a positive development like timely and peaceful election and subsequent passing of power to the elected democratic government will improve investors confidence.

The KSE-100 Index, largely seen as a benchmark for market performance, was last seen over the elusive 50,000-point mark back in June 2017. Since then, it has been unable to come too close to this level.

The IMF programme approval triggered a fresh wave of buying, taking the KSE-100 near 49,000 in August 2023, but since then, it has retreated due to profit-taking and lack of fresh triggers.

Comments

1000 characters

‘Pre-election rally’: PSX has potential to reach near 50,000, says brokerage house

No signs of slowdown: KSE-100 gains over 1,000 points

COP28: UAE president announces $30bn fund to bridge climate finance gap

Israel resumes Gaza attacks as truce expires, heavy fighting reported

Inter-bank: rupee records 4th consecutive gain against US dollar

Open-market: rupee continues to strengthen against US dollar

Britain’s King Charles urges rapid environmental repair in COP28 speech

COP28: Caretaker PM Kakar arrives at Dubai Expo City

Supreme Court seeks govt reply on plea against expulsion of Afghans, says petitioner

Automakers continue to shut production amid falling demand, raw material shortage

Oil prices stabilise after slump on underwhelming OPEC+ cuts