KARACHI, Nov 1: Highest-ever inflow of foreign exchange was witnessed in a single month, which was a record for Pakistani stock market.
The portfolio investment came as Special Convertible Rupee Account (SCRA) hit $302 million in October 2007. It was a record high inflow in a single month.
The shares market has been waiting for foreign investment, but it failed to attract or retain investment during the first quarter of the current fiscal.
The portfolio investment was almost negative during July-September.
The four-month, July-October, total inflows in the shares market reached $296 million which are less than the total inflows during October, reflecting a negative total during the first quarter.
It could be strange for political analysts that a sudden jump in foreign inflow was because of political stability in the country. Some analysts believe that the political stability helped build confidence for the record portfolio investment.
The foreign direct investment during the first quarter witnessed a 10 per cent decline, but mainly because of non-availability of privatisation proceeds.
The political instability, which was due to expected general elections, did not allow the government to take any major step for selling public sector units.
Analysts said the portfolio inflows were also important because the total $302 million did not include any inflows through launching of global depository receipts (GDRs).
October witnessed massive inflows and outflows despite record investment. During the month, $639.8 million landed into the shares market while the outflow was $337.8 million, showing the high volume of trading.
In the first four months, July-October, total inflows were $1.804 billion and the outflows were $1.507 billion.
Last year, the portfolio investment were to the tune of $3.2 billion which included GDRs. By excluding the GDRs, the total portfolio investments were about $900 million.
However, the most significant was the unchanged pattern of investment as most of the investments were still coming from United States.
The US investment reached $257.9 million during October and in the four months its total investment was $352.7 million. After US, the United Kingdom showed interest to invest $18.4 million during October but its total investment in four months was negative in terms of outflow of $52.5 million.
Kuwait and Hong Kong were others who remained positive while investing in Pakistan.
Analysts were of divergent views. Few of them said the record crude oil prices which reached $96 on Thursday would add to the liquidity already existing in the international the market. The recent cut in the US interest rate aiming to create liquidity has also found ways to maximise profits by investing in the ‘risky’ countries like Pakistan.
Analyst said three major political developments produced a stable situation in October. First the Supreme Court allowed presidential election, secondly General Musharaff was re-elected and thirdly the arrival of Benazir Bhutto which removed possibility of any confrontation with the government.
However, it is believed that the recent development in the North of Pakistan, series of bomb explosions and the return of Benazir Bhutto to Dubai could cause an outflow during November.
