Islamabad, In an unexpected turn of events, the recent national elections in Pakistan have resulted in a hung parliament, defying pre-election surveys and analyst predictions. The Pakistan Tehreek-e-Insaf (PTI)-backed independents have emerged as the largest group in the National Assembly, securing 92 seats out of a total of 264. This outcome has surpassed the Pakistan Muslim League-Nawaz (PML-N), which, along with six independents joining the party, has won 81 seats, and the Pakistan Peoples Party (PPP) with 54 seats. With no party achieving a simple majority, the nation is now bracing for the formation of a coalition government, although the specifics of this coalition remain uncertain.

According to AKD Securities Limited, this development has taken many by surprise and sets the stage for a potentially unstable political climate. Analysts caution that managing a hung parliament could be challenging, with risks of political instability. Moreover, the incoming government, regardless of its composition, will inherit a daunting economic landscape characterized by high inflation, interest rates, and external debt obligations, further complicated by limited foreign exchange reserves.

The economic outlook appears grim, with Pakistan expected to negotiate an Extended Fund Facility (EFF) with the International Monetary Fund (IMF) amidst stringent economic conditions. The success of these negotiations and subsequent economic reforms are deemed critical for stabilizing the nation’s economy. However, the effectiveness of these measures could be hindered by the fragility of the expected coalition government.

The stock market has already reacted negatively to the uncertainty, with a significant drop in points immediately following the election results. Investors are advised to remain cautious and focus on mainboard stocks to mitigate risks. The eventual appointment of the next Finance Minister and the government's initial policies will be crucial in determining the market's direction and investor sentiment in the near term.

This report is provided by AKD Securities Limited, emphasizing that it does not constitute an offer or solicitation to transact in any securities. It is intended for informational purposes, highlighting the importance of seeking financial advice tailored to individual investment objectives and circumstances. AKD Securities Limited stresses the independence of its research and the absence of any conflicts of interest in the preparation of this report.