Pakistan stock market Reeling !

$471.5m drained out from markets

KARACHI - Portfolio investment in the Pakistani stock markets took a sever blow with foreign investors pulling out $471.5 million in only two months from July to September 5 while cumulative net flow was still on negative territory and further soared to the tune of $227 million, triggering fears in share markets.In August, foreign investors ejected $27.5 million and cumulative inflow in the period under review stood at $19 million.On September 5, the State Bank of Pakistan reported that the net flow of the portfolio investment has landed into negative by $227 million from July to date, which reflects further erosion of foreign investment as it stood negative by $112 million on June, 06 2008.During the period under review, the share markets witnessed cumulative inflow of $244m.The stock market watchers attributed the massive outflow to prolong political uncertainty and deteriorating economic and law and order situation in the country.They are of the opinion if the political conditions remain volatile the investment would continue to wobble and may witness further down grading in the investment.In Pakistan, like any other country of the region, political movements and uncertainty play a vital crucial role and negative role in effecting investment atmosphere in the country.Before judicial crisis erupted on March 9, 2007, the stock markets were robust and showing good results but as the crisis deepened it affected the portfolio investment which may continue to slide further if the government failed to take corrective measure in order to stabilize the political condition in the country, analysts said.A major outflow of portfolio investment had been recorded from the USA, UK, Switzerland, Hong Kong and Australia.According to the State Bank of Pakistan (SBP) data, the USA investors withdrew $284 million, UK $75 million, Switzerland $47 million, Hong Kong $34 million and Australia $12 million during July-08 to September, 5 2008