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KSE sees $23m outflow in Jan

RECORDER REPORT

KARACHI: The Karachi Stock Exchange (KSE) saw a hefty outflow of $23 million in January 2000 investment from the foreign fund houses but financial institutions and local investors absorbed all the selling pressure where stock values rose by Rs 78.408 billion in shape of market capitalisation.

According to an information gathered from the KSE, foreign investors in January 2000 bought 14.295 million shares worth Rs 329.474 million while they sold 23.339 million shares valued at Rs 1.488 billion, hence the net outflow in the month was Rs 1.159 billion or $22.298 million.

The traders and dealers said that though the foreign outflow in January 2000 was increased to an alarming proportion but due to high domestic liquidity and restoration of the confidence of local investors all the selling pressure from offshore counters have been absorbed easily.

The foreign investors in 1999 bought 294.260 million shares worth Rs 5.076 billion and they sold 430.187 million shares values at Rs 7.337 billion during the period. The net outflow in 1999 was around Rs 2.261 billion or $43.5 million.

The decline was mainly due to a two-year dispute between the government and private power producers over tariffs, falling cotton production, widening of the trade deficit and a shrinking manufacturing sector dampened investor sentiment.

The foreign participation still lacked but the local investors including the financial institutions, banks, brokerage houses and retail investors have entered the ring in big way as their confidence have restored after the change in guards at Islamabad. The military government has promised to put the economy back on the track. The seven-month figures on the state of economy showed that the country is steadily moving towards the right direction.

The economy in the seven-month ended January 31 showed signs of improvement. Revenue collection rose 20 percent to Rs 182 billion , exports rose 8.57 percent to $4.740 billion and imports by 13.34 percent to $5.754 billion as compared to the corresponding period last year.

"The government wants to restore foreign investor confidence and the tariff dispute with eleven private power producers has been resolved,'' an analyst said. He said the government's dispute with Hub Power Co. was in court, adding that the government hoped to resolve the dispute on commercial basis, he said.

The completion of rescheduling of debts under Paris and London clubs and more funds to get by March helped appreciated the stock market in January. The stock market in the month rose by 24 percent to Rs 1,749.22 and the market capitalisation improved by Rs 78 billion to Rs 445.077 billion. The index in first three weeks have scored another 100 points and traders believed that if Pakistan gets funds from the International Monetary Fund and the World Bank and privatise one or two units before June 2000, the index might see 2000 level before the end of next month.