Foreign Disinvestment in Government Securities picks up speed

March 13, 2020 (MLN): Risk-averse foreign investors pulled out over USD 250 million from government T-bill on March 11, 2020 as total disinvestment for the day stood at USD 253.07 million.

The entire disinvestment in T-Bills on the day came from the United Kingdom.

As the chances of a decrease in the policy rate grow along with a weakening currency, foreign investors will find Government Securities less attractive.

According to SCRA numbers published by the SBP, total disinvestment in the month of March 2020 stood at USD 699.34 million out of which USD 624.992 million was in T-Bills, USD 33.282 million was in PIBs while USD 41.073 million was from Equity. With inflows of USD 27.978 million the net outflow was USD 671.370 million.

A cursory look at the investment pattern for FY20 shows a total investment of USD 4.111 Billion out of which USD 3.431 billion is in T-bills, USD 60.50 million in PIBs and USD 619.04 million in Equity was made between July – March, however total outflows of USD 1.707 billion has been recorded, leaving a net investment of USD 2.403 Billion.

Even though the UK has withdrawn USD 896.328 million from T-Bills (July-March) it still holds the largest volume of FI in short term govt debt at 57.58 percent.

Surprising, US which is the second largest investor in T-Bills has disinvested only a small fraction (3.31%) of its investment of USD 892.75 million during the period.

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