Relatively stable exchange rate? Check! Improvements in current account gap? Check! Green shoots in select listed sectors? Check! Businesses feeling ‘worst is over'? Check! Adequate growth in tax collection? Check! Monetary policy seen peaking? Check! Likely meeting of IMF targets with flying colours? Check! ADB and World Bank money lining up? Check! Sovereign bond yields tapering off? Check! Flight KSE-100 is ready for take-off! But tighten your seatbelts as the runway is long, winding and bumpy.


August 2019 saw the benchmark Pakistan Stock Exchange (PSX) recovering from what was seen to be the bottom hit on the sixteenth of that month. (See BR Research's Bears last run? July 29, 2019, Bears' last mile or two! Aug 6, 2019). But it was in September 2019 when the KSE-100 posted its first positive monthly close since January 2019 (Read KSE-100: a September to remember published Sep 16, 2019)

While PSX bulls are the out of the intensive care unit, they are yet to become fat and strong. Uncertainty over the upcoming FATF deliberations due mid-October and the news flow surrounding it may cause some jitters. But the bigger reason that is likely to prevent immediate recovery of the bulls and why the proverbial runway for flight KSE-100 is long, winding and bumpy is ‘Maulana's march'.

With the PPP and PML-N being non-committal so far, the march scheduled to begin October 27 may not be a major threat. With them, it may cause an upset, albeit unlikely, the sort that disrupts the system to the extent of re-elections.  But if history is any guide, eventually, stocks shouldn't be prevented from taking off by the march.

Khan's dharna lasted for four months in 2014. That didn't prevent stocks from growing, sans a few hiccups here and there. Because if macroeconomic outlook keeps improving, then march by a currently fragmented opposition shouldn't hold sway – unless of course, the Maulana really pulls off a million march.

But to manage a million march for indefinite time period would require sizeable bank rolling and a lot of organisational strength. Rains and winters have disrupted many war plans, including Napoleon's. Islamabad's may not be a Russian winter; but Maulana isn't a Napoleon either. Nor does it seem that the powers that be desire to upset the status quo.

Since anything is possible in politics, best not to go all in. Instead, cherry pick stocks as and when market corrects, which it will aplenty during the upcoming consolidation period. The smart money has been doing the same for quite some time even as defensive players sitting on investments committees of insurance and pension fund managers have been pulling away funds from equities and pouring into bonds. It's one thing to quote Buffet; it's another to really buy when there is blood on the streets!