Macro Analysis /

Pakistan Strategy – Politics: Prime Minister’s hand strengthens on PML-Q support

  • PML-Q will stay allied with PTI, after it wins the post of Chief Minister Punjab

  • This strengthens the Prime Minister’s position ahead of the no-confidence vote. MQM’s vote is now key

  • The KSE-100 can rebound on reducing political uncertainty and improving outlook for reforms continuity

Raza Jafri
Raza Jafri

Executive Director, Research

Intermarket Securities
29 March 2022

The political turmoil in Pakistan is nearing its conclusion, as the incumbent Punjab Chief Minister Usman Buzdar (PTI) will reportedly be replaced by PML-Q’s Chaudhry Pervaiz Elahi.

This is important because:

  • It secures PML-Q’s support (4-5 votes) in favor of PTI in the forthcoming no-confidence motion against the Prime Minister,

  • MQM-P and its critical 7 votes may now be more inclined to remain allied with the PTI (they may reportedly be offered another ministry), and

  • It may encourage some dissident PTI MNAs to return to the party’s folds.

If the above plays out, it will be difficult for the joint opposition to muster the 172 votes in the National Assembly necessary to oust Prime Minister Imran Khan. This is despite smaller parties such as BAP / JWP and one PML-Q member reportedly joining the opposition in a day of breakneck developments that also saw a no-confidence motion submitted against Mr. Buzdar, which preceded his resignation.   

It is difficult to conclusively say that Prime Minister Imran Khan will survive the no-confidence motion against him, with voting due between March 31 - April 4, but his position appears to have strengthened after Monday's developments. If the Prime Minister survives the no-confidence motion, it will be beneficial for reforms continuity even as smaller allied parties will hold more sway. The KSE-100 (forward P/E of 4.7x; at a c 40% discount to the last 10yr average) has been range-bound in the last few weeks on thin volumes, but may move higher as political uncertainty recedes and investor confidence returns.