Is foreign selling on local course troubling you? Don’t panic, some good vibes seem to be in the wind! While few foreign funds including Everest Capital are pulling out their funds from Pakistan, Duet Mena Limited - a UAE based private equity and hedge fund manager - is betting on Pakistan as an ‘attractive opportunity’!
Duet Mena is a part of Duet Group boasting assets of approximately $6 billion. According to Bloomberg, Duet EM Frontier Fund, which currently holds 11-12 percent of Pakistani equities in its portfolio, is mulling over an increase in its holdings to about 18 percent of its total portfolio. However, since the fund’s fact sheet (including the asset size) is inaccessible on the website for general public, it is nearly impossible to judge the extent of increased inflows from Duet’s fund into Pakistan’s stock market.
While the country is struggling against energy crisis, the fund manager foresees Pakistan’s electricity supply to surpass demand in a few years time, thus making investment in independent power producers is preferred investment option.
Nonetheless, the news seems to have failed to spur much excitement among brokers who are still mourning over the recent bloodshed on KSE. “Considering the massive outflows KSE has experienced of late, it seems unlikely to be of any major significance to drive market’s direction in coming times”, said a senior equity broker dealing in foreign sales at one of the leading brokerage houses.
Since the start of CY15, foreigners have remained net sellers to the tune of $123 million, which is in stark contrast to healthy foreign inflows generated in the days gone by. Net foreign inflows in CY13 and CY14 stood at $398 million and $382 million, respectively.
Be that as it may, there is no denying that increased investments from foreign funds are encouraging for investor sentiment at local bourses. Yet, the magnitude of inflows matters!
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