KARACHI: Foreign investors emerged as net buyers in August raking up equities worth $6.84 million after net selling of $61.42m in July, data released by the National Clearing Company of Pakistan Ltd showed.

Meanwhile, net foreign investment in treasury bills during the month was $836,000 while $5.1m came in the Pakistan Investment Bonds. The hot money inflows have cooled down ever since the State Bank of Pakistan cut interest rates in view of the demand contraction caused by Covid-19.

Gross inflows in the T-bills stood at $26.975m, with bulk of the money coming from the UK at $21.979m and the remaining from the US. On the other hand, total outflows were $26.139m.

Foreign selling in the stock market was reported at $45.72m in June, $39.9m in May, $68.9m in April and $84.69m in March since the pandemic instigated a massive outflow of capital from emerging and frontier markets, including Pakistan, towards more safer bets.

Despite foreign selling in the last five months, the country’s stock market has seen stellar gains as it was recently declared the best performing market in South Asia. The benchmark KSE-100 index has gained 53.6 per cent to reach 42,188.11 points in the last six months after hitting a trough of 27,228 in March on Covid-19 fears.

The market on Wednesday saw record volumes which peaked to a over 15-year high of 919m shares.

Foreign inflows in August were led by overseas Pakistanis who bought stocks worth $10.65m, whereas international corporates continued to offload their holdings, selling $3.88m. Meanwhile, foreign individuals bought stocks worth $79,172 during the month under review.

The net foreign buying in Pakistan is in line with the trend in emerging markets. The Institute of International Finance also showed that investors poured in $2.1bn in the emerging markets during August.

Published in Dawn, September 4th, 2020