The influx of foreign portfolio investments has seen a remarkable 84% surge, catapulting to a 30-month high, now standing firmly at Rs501.30 billion.
This surge stands in stark contrast to the dismal investment figures of Rs272.54 billion recorded just a year ago in June 2023.
The rebound in foreign investments aligns with the performance of Pakistan’s benchmark KSE 100-Index, which has recently scaled new heights, surpassing the 74,000-point mark. This bullish trend reflects renewed optimism and investor appetite for Pakistani assets, driven by positive economic indicators and ongoing discussions with the International Monetary Fund (IMF) for a new loan package.
According to a report by The Express Tribune, key market analysts and industry experts attribute this resurgence to several factors. They state that the positive impact of recent IMF loan programs continued investor confidence leading up to the next IMF package discussions in June-July 2024 whereas historical data underscores the potential for robust returns during periods aligned with IMF programs, instilling further confidence among foreign investors.
Experts also highlight the stable economic and currency environment as a key driver attracting foreign funds into Pakistani equities and debt markets. The stability in economic fundamentals, coupled with prospects of above-average returns, positions Pakistan favorably in the eyes of global investors seeking profitable opportunities.
Data from the State Bank of Pakistan (SBP) corroborates this positive trend, indicating a substantial increase in foreign investment across various sectors. Notably, investments in PSX shares have surged to Rs449.24 billion, a significant leap from Rs271.45 billion in June 2023.
This renewed interest extends beyond equities, with external investments in other sectors also experiencing a notable uptick, underscoring a broader confidence in Pakistan’s economic prospects.
The recent focus on government debt securities by foreign investors signals growing optimism in the stability of Pakistan’s fiscal policies and currency management.
Furthermore, the stable rupee-dollar exchange rate continued confidence as the central bank maintains its benchmark interest rate at record highs.
Looking ahead, industry experts anticipate further positive momentum in Pakistan’s markets, predicting a potential cycle of interest rate cuts starting in June 2024, following a sustained period of high inflation.
This anticipated rate adjustment is expected to drive up share prices, paving the way for a bullish trajectory in the PSX benchmark KSE 100-Index, with projections reaching around 85,000 points by December 2024 and potentially exceeding 105,000 points by June 2025.
The resurgence of foreign investments reflects a growing consensus among global investors on Pakistan’s economic resilience and potential for sustained growth, positioning the country as an attractive destination for international capital inflows.
