KARACHI, June 18: In defiance of the trend of the first four months of the current calendar year, foreign portfolio investment recorded net outflow of Rs297 million or $5 million during the month of May. But the numbers released by the stock exchange on Tuesday, would neither gladden nor sadden some of the equity traders, who view them with skepticism.

“In the final analysis, these would fall poles apart from the foreign stock investment figures compiled by the State Bank of Pakistan,” one analyst pointed out.

The argument has a grain of truth. The recently released SBP report for the third quarter (Jan-March 2002) observed: “Foreign investment in stock market registered an inflow of $55 million in Q3 (reflecting positive trends in stocks) as compared to an outflow of $61 million during Q3 last year.”

While there is no dispute over the (positive) flow this year, there is an apparent anomaly in the numbers. The month-wise foreign investment figures posted by the KSE showed net purchases of equities valuing Rs2.57 billion and net sales of Rs1.76 billion in the three months under review (Jan-March). The resultant net inflow works out to be Rs817 million or simply $15 million, which stands nowhere near the net inflow of $55 million reported by the SBP.

The fault may perhaps lie not so much in an attempt to conceal but the method of collection of figures adopted by the stock exchange. 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 data could be relied upon and might 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.

It is because of such loophole 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 the Central Bank is painfully slow. SBP was understood to have been asked by some concerned quarters 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.