In a way, the calendar 2019 was much like 2017 for the benchmark index Pakistan Stock Exchange. In both years, the market tanked a little more than 20 percent during the year. But of course, the shock, awe and fear were far more intense last year; tales will be told about the year 2019 ala the year 2009. And those timed it right, making an entry when the KSE-100 hit its low of around 28,000 points, were left 42 percent richer by the year's close. What next?  (See BR Research's Bears' last mile or two!, Aug 6, 2019, & KSE-100 getting ready for take-off, Oct 8, 2019)

 If strategy reports of some of the leading brokerage houses are any guide, then the market can be expected to end CY20 around 52,000, or about 27 percent higher. ‘If' is the operative word here. In four of the last five years, brokers' year-end outlook was overestimated by an average 18 percent; in CY16, it was underestimated by 25 percent. In part, these variances stem from inherent bullish bias of sell side players; but equally important factor is the nature of Pakistan's economy, where like cricket, anything can happen.  The question is, whether or not, this time would be any different? Let's take a look in itemised manner.

The facts on the ground today are better than the facts around the same time last year. At this time last year, Pakistan was still not admitted to al-IMF hospital, nor was there any clarity about its timing. Today, the programme is underway and by and large, the country got a clean chit in the last review.

If at this time last year, inflation was seen rising, today, it is seen tapering off in the ensuing twelve months. And if interest rates and government bond yield were expected to spell bane on equities last year, today, both are seen lower by December 2020, giving a sense of promise to the equities.

In the field of domestic politics too, a hostile climate was seen on the cards amid an accountability over-drive.  Today, things are better on that front; PTI's key political rivals are out of jail, at least for now, whereas there is a recognition within the government that NAB ought to be tamed, at least in so far as businesses and bureaucrats are concerned.

In fact, the business community also feels that the military and the civilian government are on the same page, and the powers that be are perceived to be pushing for economic reforms, growth and stability. Planning Minister, Asad Umar also said this week in Karachi that economy is PM Khan's biggest priority these days.

FATF-related worries are obviously on investors minds. But blacklisting of sorts doesn't seem to be on the cards, even as removal from grey listing is a medium-term possibility rather than a short-term one. Already some European actors along with Malaysia had supported Pakistan in FATF's last around, whereas in the February round Saudi Arabia and the UAE are expected to tame the Indian aggression at the FATF. Besides, Pakistan 2019 saw Pakistan make a few positive headlines in terms of actions taken against terror financing.

And if 2019 started with US President Trump's Pakistan-bashing tweet, the year saw US-Pakistan relations improve, transitioning to neutral grounds if not cordial. Au contraire, 2020 saw US-Iran relations worsen but with further risks eventually subsiding as Trump recalibrates towards peace-making rather than war-making. In that light, Pakistan's chance of becoming player in the Afghan peace process may also bode well.

But while these are promising possibilities, these are still rather crude possibilities. The certainty of a political and geopolitical and FATF outlook does not stand on firm ground. Meanwhile, the possibility of a mini-budget and crowding out cannot be ruled out. Tax revenues are higher but not as much to calm growing jitters on the fiscal front. So far non-tax revenues have plugged the gap. But eventually something has to give in.

And if inflation and energy price rationalisation have its way then don't be surprised to see political climate to become hostile again whereas Maryum Nawaz has been placed on ECL. Afterall, for those out of power, the next 6-9 months may be the best time to throw a spanner in the works, since after that macroeconomic stability is likely to find (a little deeper) roots. Which is why, while 2020 may be a great year to accumulate stocks on a 3-4 years horizon, it may also be turn out to be the year of broad range consolidation, or at least the next few months appear to be so. The only way to find out, is to let the year pass. (See also BR Research's CY19 outlook Game of nerves: the plot thickens, Jan 21,2019)