KARACHI: Security and Exchange Commission’s (SECP) decision to raise investment cap for mutual funds from 95pc to 100pc cash, gave Pakistan Stock Exchange much needed respite in terms of liquidity last week.
Because of this change, equity funds injected an additional Rs15b in the stock exchange last week, reported Express Tribune.
This also resulted in mutual funds becoming the largest buyers of stocks last week with investment of over Rs1.79b ($17m) and digested selling from foreign and local investors.
In January this year, SECP had set rules of 5pc cash-holding for mutual funds, which would have allowed them to claim their units any time.
The stock exchange has experienced extended periods of political turbulence and volatility that caused a significant fall on the benchmark KSE-100 index, since reaching a record high at end of May 2017.
This follows on the heels of Bloomberg reporting that $54m Pakistani stocks were purchased by foreign investors since start of September.
Foreign investors pulled out $402m from Pakistani stocks during the first nine months of 2017. In June, Pakistan was reinstated to emerging market (EM) status by index provider MSCI and re-entered S&P’s Emerging Broad Market Index from S&P Frontier BMI in mid-September.
In a meeting with Prime Minister Shahid Khaqan Abbasi at Governors House in October, Karachi stock brokers had been provided assurances for the revival of stock markets by bringing Capital Value Tax (CVT) and other taxes to their previous level.
The delegation had sought PM Abbasi’s help to revive the ailing stock-market by announcing a bailout package for it.
Also, Profit reported last week about MSCI’s semi-annual index review date (13th November) was drawing closer, a Topline Security analysis predicted Pakistan’s weightage in its emerging market (EM) index could fall to 0.10pc.
PSX witnessed foreign outflows of $98m since June compared to net foreign outflows of $315m and $339m during 2015 and 2016 respectively.
The KSE-100 index closed on Friday at 41,436 points, registering a 0.9pc week-on-week recovery and it had fallen by 17pc since June 2017.