Foreign net selling via SCRA drops by more than half

November 9, 2018 (MLN): Foreign investors continued their selling spree for yet another week as the net sale of securities for the week ended November 2, 2018 logged in at Rs.1.1 billion.

However, as compared to the prior week (ended October 26), net selling reduced significantly, by over Rs.1.5 billion (or 57.8%), as shown by the State Bank of Pakistan (SBP)’s data on Specially Convertible Rupee Accounts (SCRA).

The total sale of securities through SCRA, during the week, has been recorded at Rs.11.2 billion versus sales worth Rs.9 billion during prior week. This marks an augmentation of nearly a quarter over the week.

However, since total purchase of securities during the week grew by a much larger margin of nearly 59%, the overall impact weighed down the growth of net selling. Foreign investors purchased securities worth Rs.10 billion through the week.

Special Convertible Rupee Accounts cater to the needs of non-resident investors, who wish to trade freely in the shares quoted on the Stock Exchange of Pakistan.

Operation of SCRA accounts is up to an extent of remittances received from abroad or by transfer from a Foreign Currency Account maintained by non-resident investors in Pakistan.

The balance available therein can be used for purchase of any shares quoted on the country’s secondary markets i.e. Pakistan Stock Exchange. The disinvestment proceeds against the sale of previously purchased shares through SCRA can be credited in this account, in addition to dividend income against the shares held by non-resident investors.

The funds available in such accounts can be transferred outside Pakistan or credited to a foreign currency account of non-resident investor maintained in Pakistan at any time without prior approvals of the State Bank of Pakistan.

For the week under review, flow of remittances into SCRA has been recorded at Rs.3.5 billion while outward remittances stand at Rs.5.7 billion.

As compared to the previous week, remittance flowing into these accounts have increased by almost Rs.2 billion, while outward remittances have experienced a growth of over Rs.1.5 billion, as well.

Income from dividends credited into SCRA accounts for Rs.584 million, as compared to Rs.1.7 billion recorded a week earlier.

Meanwhile, the closing position of SCRA accounts is reported at Rs.27.7 billion, down from the Rs.28.2 billion reported a week before.

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