In a remarkable turnaround, foreign portfolio investments in Pakistan have surged by 84%, reaching a 30-month high of Rs501.30 billion. This significant increase contrasts sharply with the Rs272.54 billion recorded in June 2023, signalling a robust recovery and renewed investor confidence in Pakistan’s debt and equity markets.
The rebound in foreign investments coincides with the strong performance of Pakistan’s benchmark KSE 100-Index, which has recently surpassed the 74,000-point mark. This bullish trend reflects renewed optimism among investors, 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, market analysts and industry experts attribute this resurgence to several key factors. The impact of recent IMF loan programmes has bolstered investor confidence, with historical data indicating the potential for robust returns during periods aligned with IMF support. This ongoing confidence is expected to strengthen as discussions for a new IMF package continue into June-July 2024.
Experts also highlight a stable economic and currency environment as a major factor attracting foreign funds to Pakistani equities and debt markets. The stability in economic fundamentals, coupled with the prospects of above-average returns, positions Pakistan favourably for global investors seeking profitable opportunities.
Data from the State Bank of Pakistan (SBP) supports this positive trend, showing 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 foreign 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 and continued confidence as the central bank maintains its benchmark interest rate at record highs have contributed to this positive investment environment.
Looking ahead, industry experts anticipate further positive momentum in Pakistan’s markets. A potential cycle of interest rate cuts starting in June 2024, following a sustained period of high inflation, is expected to drive up share prices. Projections suggest the PSX benchmark KSE 100-Index could reach around 85,000 points by December 2024 and potentially exceed 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.
