KARACHI, Nov 1: Portfolio inflows reached record level in October reflecting the attractive returns of investing into the shares market. The latest official data shows that most of the portfolio investments came from only four countries led by the United States and it was the record investment made in any month.
Since July 2006, total portfolio inflows reached $312.563 million while $215.394 million alone were invested into the shares market in October, which means 69 per cent of the total investment came in October.
During the month the USA invested $96.7 million, UK $41 million, Singapore $67.2 million and Hong Kong $18.2 million.
The growing attraction for foreign fund managers was financial sector where profits broke all previous records. Analysts said it was not only record profitability of the banking sector but a lot of other activities in the sector generated hopes and potential for future investments.
“Economists expect that the fall in oil prices will benefit the developing economies like Pakistan, which created attraction globally for investing here,” said Mohammad Suhail of JS and Company.
Pakistan depends 80 per cent on imported fuel for its energy requirement and 35 to 40 per cent decline in oil prices would directly benefit the economy.
He said that the enhanced activities in the banking sector were another reason for attraction to invest in Pakistani bourses.
Highest investment came in the banking sector. Pakistani banking sector has been a focal point for the foreign investors as some large international banks showed interest in acquiring banks. Standard Chartered Bank bought a rising local bank to expand its operation in the country.
Two more international banks are looking for suitable banks in Pakistan for investment or acquisition.
The banking sector profitability, which stood at over $1 billion, is at an all-time high and is generated by the enhanced business volume, the rising share of high-yield assets and widening spreads. All of which provide a considerably healthy return on equity of over 26 per cent after tax in the banking sector.
Power sector was another attraction for the foreign funds. Most of the investments came into the oil exploration, which has vast potential to benefit the investors.
Some of the foreign fund managers were in talks with local brokerages so as to establish joint ventures for investment in equity market. These mergers have produced attractive results for the investors in China and India.
Foreign direct and portfolio investment in Pakistan registered a 131 per cent increase in the last fiscal year amounting to $3.87 billion compared to $1.67 billion the year earlier.
