Foreign investors offload net USD 243.77 million from local debt market during Jul-Dec FY21

January 3, 2021 (MLN): Pakistan’s debt market witnessed a significant outflow of hot money during 6MFY21, as foreign investors offloaded $499.5 million worth of government’s short-term papers  (T-bills) amid the covid-19 crisis, against the inflows of $178.64 million, resulted in net divestment of $320.9 million, reveals the statistics gathered by the State Bank of Pakistan (SBP). 

Contrary to the T-bills, the long-term instruments (PIBs) witnessed a paltry outflow of $52 thousand during the period mentioned above, with the inflows stood at $77.19 million. This suggests that Government securities attracted $255.82 million in overseas cash during July-Dec FY21, out of which around $499.6 million has flown out of Pakistan’s debt market, thus, the net outflow in government securities clocked in at $243.77 million. Whereas, in the corresponding period of last year, government-backed securities witnessed net inflows of $1.46 billion.

Foreign investors have been pulling out their investments from government-backed domestic securities and have off-loaded around $2,791 million from the debt market since the pandemic spread back in Mar’20, as weak interest and the pandemic continue to remain the reasons for outflows.

Similarly, on the equity front, non-stop foreign corporate selling has been a major factor affecting share prices and stock market sentiments in Pakistan since CY15. During the review period, Foreign investors detached $539.37 million from the domestic equity market, against the inflows of $254.9 million. This has brought the overall net divestment (T-bills, PIBs, and Equity) to settle at $528.23 million for the period under review. while, during the Jul-Dec FY20, foreigners were the net buyers as they parked net $1.432 billion via Special Convertible Rupee Accounts (SCRA).

Country-wise, UK and USA remained the top destinations of the repatriated funds, with the former accounting for net $397.82 million, while net outflows from the latter clocked in at $88 million during Jul-Dec FY21.

With regards to the government’s denominated securities particularly, investors from UK and USA have reduced their positions by withdrawing $452.9 million and $38.44 million against the inflows of $124.9 million and $51 million respectively.

Copyright Mettis Link News