Pakistani equities lose 83% foreign investment since 2016 on economic, political turmoil 

A stockbroker speaks on the phone during a trading session at the Pakistan Stock Exchange in Karachi, Pakistan, on April 4, 2022. (AFP)
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Updated 23 August 2022
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Pakistani equities lose 83% foreign investment since 2016 on economic, political turmoil 

  • Pakistan attracted highest-ever foreign investment of $8.2 billion in 2016, which has declined to $1.4 billion 
  • Financial experts say investment in Pakistani equities is expected to improve after $1 billion inflows from UAE 

KARACHI: Foreign investment in Pakistan’s equities has declined by 83 percent to an estimated $1.4 billion since 2016, a recent study by a leading Pakistani brokerage house suggested on Monday, with financial experts attributing it to persistent economic and political instability and a US interest rate hike. 

Foreign investment in equities through the Pakistan Stock Exchange (PSX) peaked to $8.2 billion in 2016 as the South Asian country displayed robust economic growth and currency stability. 

However, political instability, triggered by the Panama Papers leak in 2016 that led to the ouster of former prime minister Nawaz Sharif, forced foreign investors to offload their positions in Pakistan. 

The investment fell to $6.7 billion in 2017, $4.4 billion in 2018, $4.1 billion in 2019, $3 billion in 2020, $2.1 billion 2021, and $1.4 billion in 2022, according to a research report shared by the Karachi-based the Topline Securities brokerage house on Monday. 

“Pakistan’s currency and market were stable and economy was growing back in 2016 which are one of the key considerations of the foreign investors to take investment decisions,” Umair Naseer, a Topline Securities research director, told Arab News on Tuesday. 

“The reasons of foreign investment fall among others include inconsistent economic policies and instabilities and political uncertainties which are negative for foreign investors and play bigger role in keeping them away.” 

Khurram Schehzad, chief executive officer at the Alpha Beta Core financial advisory firm, agreed with Naseer and said the country’s issues were largely related to macroeconomics. 

“Political uncertainty and policy inconsistency have been two key reasons for low foreign interest. We have been downgraded back to Frontier Markets too,” Schehzad told Arab News. 

“Low liquidity, IPOs (Initial Public Offerings), issues with investors getting their dividends out (and general inflow/outflow of foreign direct investors) have been additional issues associated with our investment climate. Higher taxes and most of all, extreme volatility in currency have kept foreign investors away. So our issues have largely been macro.” 

MSCI, a New York-based global index provider, downgraded Pakistan to a frontier market in 2021, four years after its status was elevated to an emerging market. 

Another key reason, analysts say, for the outflow of foreign investment from Pakistan was an interest rate hike by the Federal Reserve (FED) of the United States. 

“In recent years we have witnessed a global trend that the investment from emerging markets has flown out to other investment avenues due to the USA FED rate hike,” Naseer said. “International investors do not see any attraction in risky emerging markets.” 

In July, the US Federal Reserve increased the interest rate by 75 basis points that, coupled with earlier hikes in March, May and June, jacked up the central bank’s interest rate from near zero to 2.25-2.50 percent overnight. FED is expected to raise the rate by another 50 basis points next month. 

But while the South Asian country witnesses dwindling foreign equity investment, anticipated $1 billion inflows from the United Arab Emirates (UAE) are likely to rejuvenate the bourse, experts said. 

“The investment is at lower ebb but we don’t see it going further down keeping in view the expected upcoming investment from the UAE, which would improve the equity investment numbers in the coming days,” Naseer said. 

Pakistan has successfully secured $4 billion from friendly countries, including $2 billion from Qatar, $1 billion from Saudi Arabia for deferred oil payments, and $1 billion from the UAE through investment in equities. 

The South Asian country is also expected to receive $1.2 billion from the International Monetary Fund (IMF) after its board meeting on August 29 l, which could open the door to financing from other multilateral and bilateral lenders. 

PSX officials say they are in the process of coming up with new measures and products to improve the investment climate at the bourse and attract foreign investment. 

“We are constantly working on improving the investment climate by offering new products, digitization of services, and IPOs with enhance focus on the listing of IT companies to attract foreign investment,” Raeda Latif, PSX head of marketing and business development, told Arab News. 

“We have made an alliance with the Pakistan Software Export Board for listing of 40 IT companies that would be funded because the foreign investment also comes through IT companies and it also boosts countries exports.” 


Rain washes out first session on Day 3 of first test between South Africa and Pakistan

Updated 11 sec ago
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Rain washes out first session on Day 3 of first test between South Africa and Pakistan

  • South Africa wants a victory for a place in next year’s World Test Championship final
  • The host team claimed a 90-run lead after Markram and Bosch scored half centuries

CENTURION, South Africa: Rain delayed the start of the third day’s play in the first cricket test between South Africa and Pakistan with no play possible before lunch on Saturday.
The entire first session was washed out at SuperSport Park with Pakistan scheduled to resume its second innings at 88-3 – still trailing South Africa by two runs.
South Africa has plenty of time left to press its bid for a place in next year’s World Test Championship (WTC) final.
The home team needs to win one of the two test matches against Pakistan for a guaranteed place in next June’s WTC final at Lord’s.
South Africa claimed a 90-run first innings lead on the back of half centuries from Aiden Markram and debutant Corbin Bosch, who smashed an unbeaten 81 on a dream debut.
Bosch's scintillating knock, which featured 15 fours, was the highest score by a No. 9 batter on debut in test history.
Pakistan had been bowled out for 211 as Bosch claimed a wicket with his first ball and finished with impressive figures of 4-63.
Paceman Dane Paterson took 5-61 on a wicket where both teams have packed their line-ups with four fast bowlers each, going into the game without a specialist spinner.


Afghanistan says its forces targeted ‘several points’ in Pakistan in retaliation for this week’s airstrikes

Updated 14 min 37 sec ago
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Afghanistan says its forces targeted ‘several points’ in Pakistan in retaliation for this week’s airstrikes

  • The skirmishes mark the latest spike in hostilities on the frontier between Afghanistan and Pakistan
  • A Pakistani defense source says fighting along the border led to ‘heavy casualties’ on the Afghan side

KARACHI: Afghan Taliban forces targeted “several points” in neighboring Pakistan in retaliation for Pakistani airstrikes this week, Afghanistan’s defense ministry said on Saturday, marking the latest surge in hostilities along the disputed frontier between the two nations.
The Durand Line, established as the boundary between Afghanistan and British India in 1893, has been a persistent source of contention, with no Afghan government ever recognizing it as an international border. Tensions along this frontier further escalated since the Taliban takeover of Kabul in 2021, further straining relations between the two countries.
The Afghan defense ministry statement did not mention Pakistan, but said the strikes were conducted “beyond the assumptive lines,” an expression used by the authorities in Kabul to refer to the country’s border with Pakistan.
A Pakistani security source acknowledged the attack, saying the skirmishes had injured three soldiers and resulted in “heavy casualties” on the Afghan side.
“Several points beyond the assumptive lines where the attacks in Afghanistan were organized and coordinated from wicked elements’ hideaways, centers and supporters; were targeted in retaliation from the southern side of the country,” the Afghan defense ministry said on X.
The Pakistani security source said around 20-25 members of “Fitna Al-Khwarij,” a reference to the banned Tehreek-e-Taliban Pakistan (TTP), attempted to infiltrate Pakistan’s border in Kurram and North Waziristan districts while “using border posts of the Afghan Taliban.”
The TTP leadership is reportedly based in Afghanistan. Pakistan has frequently accused the Taliban government of facilitating attacks by the militant network against its security forces and civilians, urging Kabul to prevent its territory from being used by such armed factions.
The Afghan Taliban, however, deny these allegations, asserting that Pakistan’s security problems are internal matters that require attention from the Islamabad government.
“Upon failure of the infiltration attempt, TTP members and the Afghan Taliban [forces] opened fire on Pakistani posts using heavy weapons early morning on Dec. 28,” the Pakistani security source said. “Pakistani forces retaliated to this unprovoked fire and there were reports of deaths of more than 15 TTP members and Afghan Taliban forces.”
The border skirmish followed Pakistan’s reported airstrikes in an eastern town of Afghanistan, which targeted alleged TTP hideouts, amid allegations by Pakistani officials of cross-border militant attacks.
Afghan authorities claimed the victims of the strikes included residents from Pakistan’s border regions, who were uprooted during military operations against TTP fighters in recent years, with the United Nations (UN) expressing concern over civilian casualties and urging an investigation.
The Pakistan military, however, pledged to dismantle “terrorist networks” to safeguard its citizens, without acknowledging the airstrikes.


Pakistan weekly inflation increases for third week in a row

Updated 28 December 2024
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Pakistan weekly inflation increases for third week in a row

  • Pakistan’s annual consumer inflation slowed to 4.9 percent in November, lower than the government’s forecast
  • Major increase observed in prices of chicken, tomatoes, sugar, vegetable ghee, liquefied petroleum gas and soap

ISLAMABAD: Short-term inflation, measured by the Sensitive Price Index (SPI), has risen to 5.08 percent in Pakistan on a year-on-year basis, the country’s statistics bureau said this week, with an increase observed in prices of edible items.
The SPI, which comprises 51 essential items collected from 50 markets in 17 cities, is computed on a weekly basis to assess the price movement of essential commodities at shorter interval of time so as to review the price situation in the country.
The SPI for the week ending on Dec. 26 increased by 0.80 percent as compared to the previous week, according to the Pakistan Bureau of Statistics (PBS). This is the third time short-term has increased in the South Asian country. Weekly inflation last decreased by 0.34 percent in Pakistan in the week ending on Dec. 5.
“During the week, out of 51 items, prices of 17 (33.33 percent) items increased, 10 (19.61 percent) items decreased and 24 (47.06 percent) items remained stable,” it said in a report.
Major increase was observed in prices of chicken (22.47 percent), tomatoes (20.75 percent), sugar (2.19 percent), vegetable ghee 1 kilogram (1.17 percent), firewood (0.95 percent), cooking oil 5 liter (0.74 percent), cooked beef and mustard oil (0.69 percent) each, liquefied petroleum gas (0.18 percent) and washing soap (0.09 percent).
The items that recorded a decrease in prices included onions (8.13 percent), potatoes (2.38 percent), bananas (0.68 percent), rice (0.50 percent) and eggs (0.30 percent).
Pakistan’s annual consumer inflation slowed to 4.9 percent in November, lower than the government’s forecast, according to the PBS. The finance ministry had projected inflation would slow to 5.8 percent-6.8 percent in November and ease to 5.6 percent-6.5 percent in December.
Consumer inflation cooled from 7.2 percent in October, a sharp drop from a multi-decade high of nearly 40 percent in May 2023.


Head of coalition party slams ‘foreign interference’ in Pakistani politics, vows to defend nuclear program

Updated 28 December 2024
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Head of coalition party slams ‘foreign interference’ in Pakistani politics, vows to defend nuclear program

  • Bhutto-Zardari’s statement comes days after the US imposed sanctions on entities related to nuclear-armed Pakistan’s missile program
  • It also follows Trump nominee Richard Grenell’s call for the US administration to push for ex-PM Imran Khan’s release from Pakistan jail

ISLAMABAD: Bilawal Bhutto-Zardari, chairman of a main party in the ruling coalition, on Friday criticized “foreign interference” in Pakistan’s politics, saying that its real target was the South Asian country’s nuclear program.
Bhutto-Zardari’s statement came days after US President-elect Donald Trump’s special envoy nominee Richard Grenell urged President Joe Biden’s administration to use its last days in power to push for former prime minister Imran Khan’s release from prison so he could run for office in Pakistan.
Grenell has been in the news in Pakistan in recent weeks over social media posts calling for the release of Khan. His comments came more than a week after the US State Department imposed sanctions on four entities related to nuclear-armed Pakistan’s long-range ballistic-missile program, including on the state-owned defense agency that oversees the program.
Speaking at his Pakistan Peoples Party rally in Larkana, Bhutto-Zardari said Pakistan was currently facing internal issues, economic crisis and a surge in militancy as well as several difficulties on the external front, which required unity of all political stakeholders.
“No one is worried about Pakistan’s democracy, human rights or about a prisoner in Pakistan,” he said, without naming anyone.
“Imran [Khan] is only an excuse, but the target is Pakistan’s atomic program.”
Bhutto-Zardari said Pakistan’s opponents were looking at the country’s nuclear capability with an “evil eye.”
“They wish that no Muslim country should have such [nuclear] power and they are trying to deprive you of this power some way or the other,” he said.
“As long as the Pakistan Peoples Party is there, we will not let anyone make a compromise on our atomic power.”
Speaking to reporters on Thursday, Pakistan’s Foreign Office Spokesperson Mumtaz Zahra Baloch declined to comment on Grenell’s statement, while Pakistan’s Defense Minister Khawaja Asif this week alleged that Western voices backed by Israel were demanding Khan’s release from prison as part of an “anti-Pakistan campaign.”
Pakistan has been gripped by political unrest and uncertainty since Khan’s ouster from power through a parliamentary no-confidence vote in April 2022. He blames his removal from the PM’s office on his political rivals led by PM Shehbaz Sharif and the all-powerful military. Both reject the charge.
Khan has been in jail since August last year on a slew of cases he says are politically motivated to keep him away from power.


Pakistan’s cabinet approves policy guidelines for trade in carbon market

Updated 28 December 2024
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Pakistan’s cabinet approves policy guidelines for trade in carbon market

  • The new guidelines will establish regulatory framework for governing both voluntary and compliance carbon market activities
  • These markets are carbon pricing mechanisms that enable governments, non-state actors to trade greenhouse gas emission credits

ISLAMABAD: Pakistan’s federal cabinet on Friday approved policy guidelines for trade in carbon markets that help channel financial resources to reduce carbon emissions and mitigate their contribution to climate change.
Carbon markets are carbon pricing mechanisms enabling governments and non-state actors to trade greenhouse gas emission credits. There are two types of carbon markets: compliance and voluntary. In compliance markets such as national or regional emissions trading schemes, participants act in response to an obligation established by a regulatory body.
In voluntary carbon markets, participants are under no formal obligation to achieve a specific target. Instead, non-state actors such as companies, cities or regions seek to voluntarily offset their emissions, for example, to achieve mitigation targets such as climate neutral, net zero emissions.
The new guidelines aim to establish a clear regulatory framework for governing both voluntary and compliance carbon market activities in Pakistan, following international requirements and good practices.
“The federal cabinet approved policy guidelines for trading in the carbon market on the recommendation of the Ministry of Climate Change and Climate Coordination,” Prime Minister Shehbaz Sharif’s office said in a statement after the meeting.
Pakistan’s Ministry of Climate Change marked Nov. 16 as the Pakistan Pavillion’s “Carbon Market Day” and organized a high-level event on carbon markets at the UN COP29 climate summit to cement Pakistan’s commitment to participation in the new global carbon market.
Nearly 200 governments agreed on the framework that sets up a centralized global mechanism with clear rules and procedures for countries and companies involved in carbon credit transactions.
Pakistan’s policy guidelines aim to foster investments in energy, agriculture and forestry sectors, according to state media. Through these carbon markets, businesses will be encouraged to adopt eco-friendly technologies and reduce greenhouse gas emissions.
Under Article 6 of the Paris Agreement Crediting Mechanism (PACM), developing countries can host emissions reduction and removal projects and trade the resulting carbon credits internationally as a means to generate new revenue streams and unlock investment in ambitious climate action.
Pakistan’s “Carbon Market Policy Guidelines” outline a cohesive strategy and authorization criteria, which prioritizes investment in resilience and climate change adaptation, and works closely with provincial governments, the UN Environment Program says on its website.
“While these guidelines offer cultural and geographical nuance for each province’s differential needs, they set stringent quality control criteria, thus ensuring high-quality project development with substantial co-benefits. Finally, countries will experience a competitive and cost-efficient framework that emphasizes fairness in benefit distribution,” the document says.
A number of project opportunities have already been identified on the basis of which the government of Pakistan intends to initiate dialogues on Article 6 collaboration, according to the UN.