Khan’s Victory Set to Revive ‘Bullishness’ in Pakistan Markets
(Bloomberg) -- Pakistan Prime Minister Imran Khan’s victory in a confidence vote in Parliament, gave a boost to his fragile government and may help lure investors to its equity markets.
Khan got 178 votes from members of his Tehreek-e-Insaf party and allies in the 342-seat lower house National Assembly, proving majority, Speaker Asad Qaiser said in televised meeting in Islamabad on Saturday.
His win may temporarily bring stability to the South Asian nation as its economy recovers from the pandemic-induced contraction with the help of the International Monetary Fund’s $6 billion loan program. With U.S. President Joe Biden urging allies to uphold democracy, stability in Pakistan is an advantage in the region, which is already reeling from a coup in Myanmar.
“For the next six months I see a clear road of bullishness,” said Ayub Khuhro, chief investment officer at Faysal Asset Management Ltd. The fund manager will be buying stocks, he said.
The KSE-100 Index, which has risen about 68% since March 25 when countries went into lockdown, has pared some of the gains since the political turmoil began.
The army-backed former cricket star voluntarily sought the confidence vote after his finance minister Abdul Hafeez Shaikh unexpectedly lost an election for a Senate seat to an opposition-backed candidate on Wednesday, triggering a debate Khan had lost the majority support.
The strong military, which has an outsized role in Khan’s administration - with a say in matters from foreign policy and security to economic decisions, - may be relieved to see him surviving the vote.
“Political uncertainty has decreased because of this,” said Amjad Waheed, chief executive officer at NBP Fund Management Ltd., the nation’s largest fund manager with 170 billion rupees ($1 billion) in assets. “It can never end in Pakistan. It’s a favorite pass time to talk about politics. We don’t talk about health, education or anything else.”
Khan indeed faces another test this week. The nation’s upper house will elect a chairman on March 12 in a secret ballot. Should Khan’s candidate win that vote, it will make it easier for the premier to get laws enacted, said Faysal Asset’s Khuhro.
Meanwhile, the Senate result has been a boost for the opposition alliance that plans to march on Islamabad on March 26 to topple Khan’s government, two years before he finishes a five-year term. The alliance includes the Pakistan Muslim League-Nawaz led by ex-premier Nawaz Sharif and the Pakistan Peoples Party of former President Asif Ali Zardari.
“For the last couple of years, politics was not an active variable but now we will need to follow it,” Muhammad Asim, CIO at MCB-Arif Habib Savings and Investments said by phone.
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