Topline Securities’ review of three historical events suggests Pakistan’s stock market initially fell 3–5% but delivered positive returns over the following two months.
KARACHI: Pakistan’s stock market could recover from its initial negative reaction to the imposition of emergency and governor’s rule in Khyber-Pakhtunkhwa (KP), with historical analysis suggesting potential gains over the following two months, according to Topline Securities Limited.
In a report dated October 12, 2026, the brokerage said its review of three comparable political events over the past two decades showed that markets initially reacted negatively but subsequently recorded positive returns.
“On average, in the first few days, the market remains negative in the range of 3–5%, while over the next two months, the market recovers and provides a net positive return of 3–19%,” the brokerage said, referring to its historical analysis.
Topline Securities said the subsequent recovery in these cases was associated with political crises remaining contained, improving economic conditions or the prospect of fresh elections.
Emergency and governor’s rule in KP
The report follows the approval of emergency and governor’s rule in KP on October 11, 2026, amid concerns over the province’s law and order and terrorism situation.
According to the report, President Asif Ali Zardari approved the measures on the advice of Prime Minister Shehbaz Sharif, invoking Articles 232 and 234 of the Constitution of Pakistan.
The brokerage cited news reports stating that governor’s rule could initially remain in place for two months, with extensions subject to parliamentary approval, up to a reported maximum of six months.
It also noted that the provincial assembly would remain functional, while federal legislation would take precedence over conflicting provincial laws in the circumstances described in the report.
Federal advisory team to oversee affairs
Topline Securities said the province was being administered under the governor following the measures, while the federal government had formed an advisory team comprising 11 technocrats to oversee government affairs.
The political developments have introduced uncertainty for investors, although the brokerage’s historical review suggests that the immediate market response does not necessarily determine performance over the medium term.
However, Topline Securities’ findings are based on only three historical events and should not be treated as a guarantee of future returns. The market’s performance will depend on how the political situation evolves, as well as economic conditions and investor sentiment.
The report provides historical context for investors assessing the potential implications of the latest developments in KP for Pakistan’s equity market.