KARACHI, Feb 1: The rising foreign portfolio investment in the country is expected to break the earlier record of 1994 by a big margin, experts anticipate.

They said the portfolio investment could reach to record $2 billion mark by the end of the current fiscal mainly on account of huge inflows through the Global Depository Receipts (GDRs) of two Pakistani entities.

The half-yearly portfolio inflows have already reached $627 million while the addition of $150 million GDR of Muslim Commercial Bank and $800 million of Oil and Gas Development Company (OGDCL) would push the total to cross the early record of 1994.

In the fiscal 1994 the portfolio investment had reached around $1 billion and this was also because of GDR of Pakistan Telecommunication Company (PTCL).

“The listed companies’ GDRs are included in the portfolio inflows, which will certainly increase the shares of foreign investment into the market capitalisation,” said Mohammad Imran, head of research at First Capital Securities.

Market capitalisation of foreign portfolio investment has reached four per cent while it reached 16 per cent on the basis of free float.

“The market capitalisation on free float basis has significantly increased and it could reach up to 18 or 19 per cent by the end of the current fiscal,” said Imran.

He said India was the real beneficiary of the portfolio investment in the region and flows in the Indian capital markets were much higher than Pakistan.

The latest data issued by the State Bank on Thursday showed that during the month of January total portfolio investments were up to $103.6 million, indicating a rising trend for the Pakistani capital market. However, the United States alone invested $118 million, while the UK withdrew huge amount of $30.7 million. Hong Kong was another major country, which invested up to $12 million during the same month.

During July-December, the portfolio investment reached $627 million compared to $359 million during the corresponding period of last year.

Analysts said the widening current account deficits would force the government to find more options to earn foreign exchange and the GDRs have been providing a decent way to help out the government to meet the gap.They said the government had found alternate way to get cheaper foreign exchange through issuance of GDRs. They said the response to MCB and OGDCL GDRs has encouraged the government to come out with more GDRs.

The trade gap might reach over $13 billion by the end of this fiscal as the growth in exports was much lower than the target, while the imports were on rise.

“There is a strong possibility for issuance of GDR of National Bank of Pakistan and it could happen during the current fiscal,” said sources in the banking sector. However, they said no size or time was decided.They further said the government had been analysing ways on how to yield maximum from the issuance of GDRs and a series of these should be expected in the coming two or three years.