KARACHI, Feb 24: Foreign private investment in Pakistan registered a sharp increase in the past seven months of the current fiscal year. It is mainly dominated by portfolio investment that jumped more than three times compared to the corresponding period last year.

Latest data provided by the State Bank reveals that the foreign investment registered a healthy growth of 168 per cent to $1.627 billion during the last seven months as against $606.9 million in the corresponding period last year. The portfolio investment rose by 334 per cent to $400.5 million as against $91.9 million in the same period last year.

This sudden rise in the portfolio investment has boosted the sentiment in the shares market and the KSE-100 index rose by around 30 per cent since July, while the calendar year 2005 witnessed an increase of 54 per cent.

The portfolio investment has mostly landed in oil and gas sectors which are the highest earning shares and their prices have gone beyond expectations.

The foreign direct investment also registered a huge growth of 138 per cent in the last seven months. The direct investment, other than portfolio investment, was $1.226 billion as compared to $515 million. The growth in direct investment would help the government achieve its economic targets.

However, most of the foreign direct investments are coming into oil and gas sectors. The power sector is another area where direct investment has increased. However, telecommunication also achieved highest growth among various sectors of the economy.

The high inflows of foreign investment would also help the government meet challenges of increasing current account deficit. The government was hopeful to receive up to $2 billion from the foreign investment by the end of the fiscal year in June 2006.

The United States was the biggest investor. It invested $298.2 million in the shares market while its direct investment reached $291 million during the past seven months.

Saudi Arabia stood second and brought $268.8 million as direct investment, while the United Kingdom invested $100 million. The United Arab Emirates invested $50 million as portfolio investment and Hong Kong invested $46 milling in the same sector.

Analysts said that foreign investments (direct and portfolio) were coming mostly into oil and gas sectors.

Rising international oil prices have increased earnings of the oil companies in Pakistan, while the government has increased well-head prices of gas and oil — the most lucrative business in Pakistan.

The newly-developed telecommunication sector was another area which attracted big investment. The market of telecommunication still has attraction for the investors.