Nay year calls for new strategies. And most leading brokerage houses have come out with what are known as “strategy reports” for 2018. And the overriding consensus is that the worst seems over, as the average December 2018 target for the benchmark KSE-100 index is 48000 or 20 percent higher from December end 2017.

And that could well happen for 20 percent annual returns have lately been considered well within reach. The optimism, and in some cases, ‘cautious’ optimism seems to have stemmed from ‘cooling down’ of political atmosphere. Most reports, barring one, expect a smooth road to elections. Now, from what is out there, the road is anything but smooth.

Tahir-ul-Qadri is just warming up, and he has both Imran and Zardari on his sides. The religious groups in Punjab are holding rallies one after the other. There are deadlines for CM Punjab’s resignation and a highly likely scenario of opposition on roads and another round of dharna. The NAB cases will likely be decided before elections and the fallout could be anyone’s guess. Now if this is what a smooth ride looks like, so be it.

Mind you, the stock market’s collective reading and foresight, if it can be called that, has not exactly been anything to write home about. How they all misread the Panama judgement is well documented.

Also, the historic pre-election index movements have been cited as reasons for a strong recovery. The benchmark index has indeed on an average rallied between 12-15 percent three months leading to the elections. There is no reason why it can’t this time around. Another thing though that last time it was that intense and uncertain a race was long ago.

What is almost certain is the market would love to see the incumbents win for the sake of continuity. That is what forms the base case scenario of most houses too, and that has a high chance of happening. Only that continuity has no precedence in Pakistan’s election history, or else the market would not have gone up sizeable in the three month period of almost every other election in the last 25 years.

Some have also seen the not-so-bright side, and see the market tanking to even as low at 29000 points. But that is not the base case, and is based on a troubled political scenario. Granted that the index is currently trading at historic high regional discounts in excess of 40 percent, and the dividend yield is thrice as much as the next contender. That does call for some upside.

Some also expect Pakistan to go back to the IMF, and have actually pinned the hopes of index revival on Pakistan’s going back to the IMF. And in the same breath, they see no immediate threats to the macro economy for most of the year. Wonder what else makes you knock the IMF doors?