Foreign investors are continuously selling shares and withdrawing their investment from local equity market despite expectations of attractive returns at the Pakistani bourse, the best performing market in Asia. During the outgoing week, foreign investors sold shares worth $33.562 million as compared to $36.976 million withdrawn during last week.
According to National Clearing Company of Pakistan Limited (NCCPL) data, it was the fourth consecutive week of foreign selling taking year to date net foreign selling of 203.800 million. Foreign investors withdrew over $117.046 million from Pakistan's equity market during November 2016.
Local investors particularly mutual funds and individuals continue to absorb most of this selling pressure, with major buying interest witnessed in oil stocks as Opec decided to cut its production for the first time in eight years to send international oil prices soaring. And despite foreign selling, Pakistan Stock Exchange witnessed a bullish trend and the benchmark KSE-100 index closed at highest ever level of 43,271 points, with an increase of 271 points during the outgoing week.
Pakistan Stock Exchange has been the best market in Asia and one of the best performing markets in the world during last three years offering attractive returns to investors. However, good returns failed to attract foreign portfolio investment in the equity market.
Zeeshan Afzal, an analyst at Insight Securities said foreign investors are withdrawing their investments from almost all regional markets. After the US elections, the American investors are expecting revival of the US economy with increasing GDP growth and interest rate. Thus they are relocating their investments from international markets to their home markets on expectations of better returns, he said. On the other hand, after inclusion of Pakistan Stock Exchange to MSCI Emerging Market Index from MSCI Frontier Market Index, many of frontier market funds are reallocating their investments while concerns over depreciation of Pak rupee are other reasons that are inviting foreign selling at local equity market, he added.