Foreign investors' interest reviving at KSE
Monday, 4 January 2010
KARACHI, Jan 3 (Business Recorder): Foreign investors' interest at the local equity market revived with a fresh inflow of $34.44 million ($38 million currency adjustment) in the calendar year 2009 against a massive net foreign selling of $446 million in 2008.
According to National Clearing Company of Pakistan Limited (NCCPL) data, net inflow of $4.225 million was recorded in the last month of the year (December 2009) while $4.1 million of FIPI was witnessed during the last week of the year.
The massive selling by foreign investors was seen in 2008 mainly due to political uncertainty, security concerns and imposition of price floor in the year, analyst said. "The portfolio flow to the market solidified from July-09 onwards with post-Budget FY10, a 150bps cut in the policy rate by the State Bank of Pakistan (SBP) and some clarity on political front," Khurram Schehzad, an analyst at Invest Capital Securities said.
The allocation has been skewed primarily towards the major blue chip companies, he added. He said the major component pulling down overall Net Foreign Investment in the country has been the FDI so far, while Foreign Investors Portfolio Investment (FIPI) has been on the rise, hinting at the foreign investors' strategy to eye more short term gains than tying up their capital in the long term projects - amid security and law and order concerns.
He said roughly 22 per cent of the total free float of the KSE-100 index is believed to have been handed over to foreign investors during CY09 with a total holding of about $2 billion.
According to National Clearing Company of Pakistan Limited (NCCPL) data, net inflow of $4.225 million was recorded in the last month of the year (December 2009) while $4.1 million of FIPI was witnessed during the last week of the year.
The massive selling by foreign investors was seen in 2008 mainly due to political uncertainty, security concerns and imposition of price floor in the year, analyst said. "The portfolio flow to the market solidified from July-09 onwards with post-Budget FY10, a 150bps cut in the policy rate by the State Bank of Pakistan (SBP) and some clarity on political front," Khurram Schehzad, an analyst at Invest Capital Securities said.
The allocation has been skewed primarily towards the major blue chip companies, he added. He said the major component pulling down overall Net Foreign Investment in the country has been the FDI so far, while Foreign Investors Portfolio Investment (FIPI) has been on the rise, hinting at the foreign investors' strategy to eye more short term gains than tying up their capital in the long term projects - amid security and law and order concerns.
He said roughly 22 per cent of the total free float of the KSE-100 index is believed to have been handed over to foreign investors during CY09 with a total holding of about $2 billion.