Foreign players made a net investment of $45.285 million at the Karachi Stock exchange in just two sessions (Monday and Tuesday), according to the National Clearing Company of Pakistan Ltd.
Only on Tuesday, offshore investors invested $21.3 million (gross buy of $24.9 million and gross sell of $3.6 million). Moreover, total investment made by foreign players on Monday dramatically inched up to $23.99m (gross buy of $26.5m and gross sell of $2.5m).
This foreign interest in the local stock market has changed the market’s direction and index is travelling towards sky while benchmark gained over 450 points in last three sessions.
Most of the market experts are of the view that the current foreign interest in the equity market is due to the availability of attractive low-priced stocks. Shahid Ali at HMFS expressed that, “it would be unfair to say that Monday’s and Tuesday’s bullish momentum can be attributed to foreign investors who invested around $24 million only on Tuesday. We need to give credit to local investors who keep their faith in philosophies of valued investors. We are of the view market is running with heavy fuel as if you are travelling on a missile.”
While analyst Hasnain Asghar Ali stated, “the dollar inflow mania kept the local participants on edge of their seats, since the rally has been initiated by participants from foreign land earnings multiples were substantially increased, as indeed the local equity market is still offering stocks with consistent dividend and growth record at substantial discounts.”
Meanwhile, positive news flow during the month of August has fetched over $95m Foreign Portfolio Investments, highest monthly flows since February 2008. This was at the back of reversal of country risk premium led by contained twin deficits and IMF assurance of continuous funding till December 2010.
Additionally, the expected flows from US and Friends of Pakistan are likely to improve further liquidity and provide more fiscal space for government to incur development expenditures. This is reflected in the stock market and Eurobond rally off late.
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