The New Nation - Internet Edition

ANN, Karachi

Foreign investors have ejected $540 million from the Pakistani stock market in only three months from July to September amid prolonged political uncertainty, burgeoning insecurity in the tribal belt of the country coupled with global and local economic slowdown. So far this month, foreign investors have withdrawn $96 million, reflecting an increase of $68 million versus $28 million outflow witnessed in a month earlier. While inflow during September was recorded at $82 million. A major outflow of portfolio investment was recorded from the investors of the US, the UK, Switzerland, Singapore, Hong Kong and Australia.

Pakistani market has been facing turmoil for the last four months that led the market to shed around 40 per cent. In this period, many small investors have been washed out from the stock market while others are facing back to back decline despite the freeze on shares prices. Those closely watching the ebb and flow of Pakistani market linked the huge capital flight to deteriorating law and order situation, economic weaknesses, like dwindling forex reserves, devaluation of rupee against US dollar coupled with the unprecedented financial turmoil in the US, which sent shock waves to all other leading capital markets of the globe.

Analysts also held the view that the imposition of floor on the market had sent a negative signal to foreign investors and those still trapped in the market were waiting for lifting of floor from the market to make an exit. Analysts said that as long as the tension remained in the tribal belt, which was being linked with the suicide bombings in the mega cities of the country, the foreign investments would continue to wobble and may witness further downgrading.

Analysts said that Moody's verdict had also dealt a severe blow to the confidence of foreign investors and local investors as well.

The steep decline in the stock market and economic meltdown has severely hit the confidence of foreign investors, analysts added.