Foreign equity inflow at $113m in March

KARACHI: Including the net foreign purchase of shares in the phenomenal sum of $13.07 million on the last trading day of the month, the Pakistan capital market attracted $113 million during March.
Figures released by the State Bank of Pakistan showed that up until 20th of the month, aggregate foreign holding in the equity markets stood in the sum of $2.1 billion.

March marked the 10th successive month of a bull run by foreign funds. Share purchases (net) by offshore investors since June 2009 were recorded at $419 million. During the period, benchmark KSE-100 Index gained 38 per cent (33pc in US$).

Analysts at brokerage Topline Securities point to an interesting phenomenon: “In one month every year, overseas investors pour more than $100 million in the local markets. In 2008, month of February saw net overseas buying of $105 million; Sept 2009 witnessed net buying of $127 million and in the current year, March had kept up the tradition of attracting foreign portfolio investment of over $100 million.

Analysts attributed the huge inflows to renewed interest of foreign fund managers in frontier and emerging markets. The share of overseas investment in total volumes at the local bourses increased to 15 per cent in March, from an average of 9 per cent in 2009.

Topline Securities’ analysts point out that contrary to the previous trend, KSE index climbed by just 6 per cent during the outgoing month, regardless of its scaling the peak of 10,000 points after 18 months. The market had rallied by 8 per cent the last time it had posted $100 million plus net buying in Sept 2009.

Earlier still in Feb 2008 shares had gained 7 per cent. “The difference was attributable to aggressive profit taking during March by local investors amid liquidity crunch,” say the analysts.

The aggregate foreign portfolio investment of $2.1 billion amounts to 6 per cent of the aggregate market capitalisation. But in relation to free float it amounts to 23 per cent.

The offshore investors’ peak holding was recorded at $5.1 billion (27 per cent of free float) in April 2008, and lowest was seen at $1 billion (17 per cent of free float) in March 2009.