September 26, 2006	Tuesday	Ramazan 2, 1427

KARACHI, Sept 25: Foreign private investment in Pakistan’s stock market has suddenly jumped in September. Almost all the investments came from the United States and the United Kingdom.

Official figures released by the State Bank showed that up to September 22 this year, an investment to the tune of $42.096 million flew into Pakistani stocks. It was much higher than the portfolio investments made in July and August that totaled $31.9 million.

The figures showed that only investors from the US and the UK were active while the usually active Singapore, the UAE, Saudi Arabia and some European countries remained on sidelines. The US invested $26.730 million and the UK $16.371m in September.

Experts said most of the investments went in the oil sector, while telecommunications and cement also attracted some investments. Analysts said if the pace of portfolio investment continues for the whole year, it might cross the last year investment. During 2005-06, a total of $351.5 million was recorded as portfolio investment.

The inflow of foreign direct investment (FDI) also went up significantly during the first two months of the current fiscal year. During July-August 2006-07, FDI reached $375.4 million against $230.8 million during the corresponding period last year, showing a rise of 63 per cent.

Pakistan had received a record FDI of about $3521 million during 2005-06, including the privatisation proceeds. It had been the biggest help to the government struggling to meet the record trade deficit.

The rising import has threatened the balance sheet of the country’s foreign exchange account and the government’s effort to increase exports and reduce imports remained failure for the last couple of years.

The fear of further widening of trade deficit has compelled the State Bank to take care of the situation. The SBP advised banks to improve their efficiency to increase the Pakistani workers’ remittances. The SBP has set a target of $6bn for the current fiscal year remittances, while last year it received a total of around $4.3bn.

The analysts said the high portfolio investment would improve the country’s image abroad and the higher FDI was a sign that the country had potential for the foreign investment.

However, they say FDI would increase with the privatisation of government’s stakes in oil companies like Oil and Gas Development Company. They were of the view that the telecom sector had already received maximum FDI and no significant investment in this sector looked possible.

The analysts said for the last seven years there had been an effort on the government level to attract Arab country’s wealth but could hardly sell PTCL and KESC.

However, fresh investment from the Middle East has started coming into the financial sector, real estate and construction. The analysts believe that the real estate and construction had tremendous potential of growth and had great attraction for the Arab countries’ investment.