December saw a significant net inflow of $31.6 million into the Pakistan Stock Market, reflecting a rise in confidence among overseas investors. The Special Convertible Rupee Account (SCRA) appeared to have played a role in this boost in confidence, according to central bank data.
SPECIAL CONVERTIBLE RUPEE ACCOUNT (SCRA) OVERVIEW
International investors, institutions, and non-resident Pakistanis can purchase government bonds, Term Finance Certificates (TFCs), and stocks through the SCRA.
Money from abroad is translated into Pakistani rupees through this programme and deposited into the investor’s “Special Convertible Rupee” account.
DECEMBER INFLOWS AND OUTFLOWS
During December, SCRA recorded total inflows of $65 million, with a sum of $33.36 million being withdrawn. The net inflow for the month stood at an impressive $31.72 million. A detailed breakdown of the data reveals that the majority of capital, amounting to $31.61 million, was invested in equities.
Moreover, $103,400 found its way into ‘other’ categories. Notably, there were no investments in Treasury Bills (T-Bills) or Pakistan Investment Bonds (PIBs) via SCRA during the month.
INTERNATIONAL CONTRIBUTORS
The United States emerged as the largest contributor to the net inflow, injecting $33.97 million into the Pakistani market. Following closely, the Cayman Islands, Sweden, and Canada made substantial contributions of $4.85 million, $1.87 million, and $1.44 million, respectively.
On the other hand, with outflows of $3.09 million, $2.44 million, $2.15 million, and $1.2 million, respectively, the United States, the United Arab Emirates, Mauritius, and Switzerland were net sellers.
MARKET PERFORMANCE AND ECONOMIC FACTORS
A remarkable 55% rally was shown by the benchmark KSE-100 index in 2023. The International Monetary Fund (IMF), a comparatively stable currency, expectations of improving economic conditions, and rumours of interest rate cuts in 2024 were the main causes of this spike.
CURRENCY STABILITY
Over the past few months, the Pakistani Rupee (PKR) has remained stable. The value of the PKR has increased by 4.59 rupees, or 1.63%, versus the US dollar during the current fiscal year.
