The runup to Pakistan’s Feb. 8 elections may be a good time to bet on a continued move higher in the country’s stocks, history shows.

Investors who bought shares in the debt-stricken nation’s benchmark KSE-100 Index the day prior to a national vote reaped an average 7% gain over the next month, according to data from the past six elections compiled by Bloomberg. Over a three-month period, the mean advance was 19%.

That would be on top of the 61% jump since Pakistan’s initial loan deal with the International Monetary Fund, reached to ease financial strain on the country. The KSE 100 is the best-performing gauge in dollar terms since the end of June among more than 90 equity indexes tracked by Bloomberg.

“A strong government and immediate discussions with the IMF for a new package” would be a positive outcome for markets, said Bilal Khan, head of international equity sales at Karachi-based Arif Habib Ltd.

Pakistan’s nearly 127 million eligible voters will go to the ballot box next month, with a bailout package from the International Monetary Fund looming large for the country. The nation’s most popular leader, cricketer-turned-politician Imran Khan, was elected in 2018 — but ousted in 2022 and arrested on corruption charges the next year. He still sits behind bars and is barred from participation. His rival Nawaz Sharif, who has been prime minister three times, has gained ground since returning from self-exile last year.

While popular elections in Pakistan have been held since the 1970s, the country’s first benchmark stock index was established in 1991, so the analysis includes only elections after that time.


While the average post-election returns may be enticing, Pakistan’s 2018 election offers a note of caution. The stock index was little changed in the month after the polls were held in July — and down more than 5% by the time three months had passed. Similarly, in 2008 there were moderate gains after a month, but by the end of three months investors were down 3%.

The market may also run into a seasonality wall, Arif Habib’s Khan cautioned. The nation’s stocks have closed higher in February only once in the past 10 years.

Still, there are reasons for hope for investors. The elections are intended to bring an end to the political volatility weighing on Pakistan since Khan’s ouster.

Sharif and his Pakistan Muslim League party have a better record on managing the economy than their rivals, according to a Bloomberg Intelligence report. An opinion poll carried out last month showed Sharif’s popularity jumping to 52% from 36% in June even as Khan remains the most popular.

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