KARACHI: The foreign portfolio investment (FPI) hit $100 million mark in March, which is the highest monthly inflow in the current financial year.
Despite political and security concerns, the Karachi Stock Exchange attracted net buying of $100 million so far during the current month. Currently the foreigners have flooded the local stock market in recent weeks.
“The abnormal flows, is the result of renewed interest of fund managers in frontier and emerging markets,” Topline Securities analyst Farhan Mahmood said and added that the increasing role of foreign trade can be judged from the fact that their share in the total volumes in March 2010 was 15 percent as compared to the average 9 percent in 2009.
Foreigners remained net buyers in Pakistan in the last 10 months with total net inflow of $419 million since June 2009 with benchmark index gaining 38 percent (33 percent in dollar) in these 10 months. Historically it has been seen that every year there is one month in which foreign buying (net of selling) has breached the $100 million mark. Earlier in Feb 2008 net buying of $105 million and then $127 million in September 2009 were made and now in March 2010 offshore investors have already bought $100 million in with one more day remaining.
However, unlike previous trend, KSE index is up only 5 percent this month although it crossed 10,000 points mark after 18 months. Last time when $100 million plus net buying was seen in September 2009 the market rallied 8 percent. Before that in February 2008, the index rose 7 percent. Relatively less enthusiasm this time is due to aggressive profit-taking by the local investors amid liquidity crunch. According to the SBP statistics, foreigners held shares valuing $2.1 billion as of March 20, 2009. The current holding is 6 percent of the market capitalisation. But in relation to free float it is at 23 percent.
Source: http://www.dailytimes.com.pk/default.asp?page=2010\03\31\story_31-3-2010_pg5_3
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