Despite share prices becoming more attractive compared to those in other emerging markets, foreign investment in the Pakistan Stock Exchange (PSX), one of the best performing Asian markets, has halved to Rs454 billion in the last four years.
The third wave of the Covid-19 pandemic in Pakistan could be to blame for the current outflow of foreign investment, as overseas investors were net sellers for the past 13 weeks, ending on Friday, April 16.
They had previously continued to leave the market due to the rupee’s sharp depreciation against the US dollar, low foreign currency reserves, and high inflation, all of which placed foreign investment at risk, according to BMA Capital Executive Director Saad Hashmi.
Speaking on Friday, he expressed confidence that foreign investors would return to the local stock exchange because their key concerns had been resolved, with foreign currency reserves reaching a four-year high of $16 billion. He added that the rupee has recovered to Rs153 against the US dollar, and economic activity has increased recently.
