Foreign investors pull out $397mn from capital market in March

KARACHI: Pakistan’s capital market outflows have touched a two-year high in the ongoing month of March, as investors pulled out $397 million on account of political uncertainty, rupee volatility, and troubles with the International Monetary Fund (IMF) review.

According to Special Convertible Rupee Accounts (SCRA) data issued by the State Bank of Pakistan (SBP), the equity market witnessed outflows of $59.478 million and inflows of $29.290 million from March 1 till 28. There were no investments in treasury bills during the period; however, the country witnessed evaporation of $100.446 in investments from t-bills.

Total inflows in the domestic capital market were only $29.443 million during the month. This included $153,000 inflows in the Pakistan Investment Bonds (PIBs), with the rest concentrated in equities.

In April 2020, the capital market witnessed highest selling of $602 million on monthly basis.

Since the start of the fiscal year, the market has been experiencing volatility, which has been made worse by the political uncertainty created by the vote of no confidence against Prime Minister Imran Khan. In addition, Pakistan’s foreign currency reserves hit their lowest level of the current fiscal year, right when the government was in talks with the IMF for the 7th review under the Extended Fund Facility.

From July 1 till March 28, the equity market saw inflows of $363.463 million and outflows of $771.049 million. Similarly, inflows in treasury bills were $191.874 million with outflows more than double at $432.576 million.

This brings the total outflows from the domestic capital market from July 1, 2021 till March 28, 2022 to $1.583 billion.