November 3, 2020 (MLN): Pakistan’s capital market witnessed significant outflow of hot money during the month of October 2020 as foreign investors divested $268.9 million in the government’s short-term papers (T-bills) against the inflows of $12.53 million, resulted in net divestment of $256.34 million, reveals the statistics gathered by the State Bank of Pakistan (SBP).
Contrary to the T-bills, the long-term instruments (PIBs) did not record any outflow during the month, with the inflows stood at $12.69 million. This suggests that the combined inflow of foreign funds invested in T-bills and PIBs amounted to $25.2 million in October 2020 with outflows recorded at $ 268.9 million, thus, the net outflow in government securities during the month clocked in at $243.66 million. Whereas, in the previous month, government backed securities witnessed net inflows of $3.12 million.
On the equity front, Pakistan Stock Exchange has also observed outflow of $88.37 million against the inflow of $41.5 million during the month. This has brought the overall net divestment (T-bills, PIBs and Equity) to settle at $290.54 million for the month under review.
During the month, the outflows in government securities (T-bills) were largely driven by the overseas investors from the United Kingdom and Bahrain with the former accounting for $260.68 million while outflows from the latter clocked in at $5 million.
Cumulatively during 4MFY21, total hot money inflows in the T-bills amounted to $126.75 million. However, outflows during the period have reached $435.7 million, bringing net divestment in the short-term instruments to $308.95 million.
With regards to PIBs, the total foreign inflows during Jul-Oct 2020, has been at $22.86 million, with zero outflow recorded.
This suggests that since July 2020, cumulatively foreigners invested $149.6 million in Government Securities (T-bills and PIBs), while the outflows amounted to $435.7 million, bringing the total net outflows to stand at $165.7 million. Major chunk of these outflows has come from UK-based and US based investors who have reduced their positions by withdrawing $389 million and $38.4 million against the inflows of $73.27 million and $50.86 million respectively.
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