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FDI jumps 68pc in October

By Our Staff Reporter 2020-11-17
KARACHI: Foreign direct investment (FDI)into the country jumped by 67.9 per cent monthon-month to $317.3 million in October compared to $189m in September, latest data released by the State Bank of Pakistan showed on Monday.

Inflows in October were highest in 10 months since peaking at $493.03m in December, 2019.

Year-on-year, FDI increased by 150.9pc to $317.3m from $126.49m in October 2019.

Despite higher FDI inflows in October, the overall investment into the country remained poor compared to other South Asian economies as the total quantum was still the smallest in the region.

The highest inflow came from China. In fact, inflows from China, at $332m, made up for almost 45pc of the total inflows during the first four months of the current fiscal year. China has been a major contributor of foreign inflows through FDI for thelast few years and is the biggest trade partnerofPakistan.

Moreover, Pakistan received $74m from Malta unchanged from the previous year. The coun-try also received $51.5m from Netherlands, and $44m from Hong Kong. In addition, the country received $37m and $25.7m from the UK and United Statesrespectively.

Financial experts believe that the inflow during the current financial year is better than last yearandencouragingasthecoun-try was able to attract inflows despite Covid-19.

However, they also believe that the inflows would not increase further during the current financial year, as Covid-19 continues to grip the global economies.

Meanwhile, total foreign investment net of foreign portfolio and public investments into the country declined more than 64pc or $698.2m to $425m compared to $1.12 billion in the same period last hscalyear. The sharp decline in total foreign investment was mainly due to outflows from equity and debt securities to the tune of $161.2m and $598m, respectively during the four months under review.

Foreign investors, in the last three quarters, have dumped their holdings in stocks as well as government-backed securities due to Covid-19, lower interest rates and an appreciation of the rupee against dollar.

Commenting on the outflow from equities, Mohammad Sohail of Topline Securities said `foreigners have been net seHers in Pakistan market since last few years. Better returns in developed markets and slowdown in economic growth resulting in of fshore funds selling listed equities.