March 20, 2002	Wednesday	Muharram 5, 1423

KARACHI, March 19: Net foreign portfolio investment was recorded at an impressive Rs1.131 billion in February, reflecting a 23-month high point, figures released by the Karachi Stock Exchange on Monday showed.

But while certain market players were celebrating the return of the foreign investor, others poked holes in the method of collection of foreign investment data by the bourse and hence its credibility.

The office of the exchange receives the figures of foreign deals done by the stock brokers and those are then compiled and circulated to the members for information. Although the figures are relied upon and could form the basis of investment decisions, the submission of figures by brokers and brokerage houses is understood to be voluntary. It is possible for members to keep the information about some of their deals to themselves, if they so wish.

The KSE information sheet released on Monday showed that during February, foreign investors had purchased 22.2 million shares of the value of Rs1.849 billion. By contrast, they sold 21.8 million shares worth Rs718 million, reflecting net purchases of Rs1.131 billion, equal to 18 million dollars. But during the same month—on February 19— the parent company of Shell Pakistan had announced additional investment of $22.3 million in equity of the Pakistani subsidiary of the oil marketing company. If the investment by Shell, which translates into Rs1.338 billion, is included in the numbers, on balance there would be net outflow—and not inflow— of foreign portfolio investment during February.

It is because of such oddity in presentation that many people put greater faith in the foreign portfolio investment numbers released by the State Bank of Pakistan. But the problem is that the flow of such figures from central bank is painfully slow. At the Banking and Finance Conference last week-end, the Commissioner SECP, Shahid Ghaffar made the apt observation that the SBP had been asked to release the position of portfolio investment on weekly basis, including flows thereof, so that local investors could keep themselves abreast of the offshore investments.

The quicker dispensation of numbers by the SBP is imperative also because in the final analysis, its data does not always match that of the KSE. The case in point: Between July-September 2001, the KSE reported foreign purchase of shares of the value of Rs347 million and sales of Rs4.115 billion, leaving net outflow of Rs3.768 billion or US dollars 59 million. For the same period, the first quarter report of the SBP showed net foreign portfolio investment through the stock exchange in the sum of $47 million. A mis-match of at least $12 million for one quarter.

All this is not to deny that stocks are at the centre of current investment interest and the KSE-100 index had already rallied up by 492 points or 39 per cent during the first two months of the current calendar year. Foreign investors may actually be taking a brighter view of the Pakistan stocks. But the point is that whatever numbers come out of the bourses should be fairly and squarely reliable.