FDI declines in the initial two months of FY12 – Alfalah Securities Limited

Karachi: Foreign Direct Investment (FDI) has fallen by 40% YoY to USD 112.4 mn during July-August FY12 mainly due to lack of foreign investors’ interest, adverse law & order situation, and energy crisis. The net foreign investment has been lower by 77 % to USD 65.2 mn during the July-August of FY12 as compared to USD 282.5 mn last year. The portfolio investment has posted a decline of 149 % due to continued outflow from the equity market registering an outflow of USD 47.1 mn in July-August of FY12, as against inflows of USD 95.6 mn in last year.

The decline in investment and payment of foreign obligation also resulted in restraining the growth of foreign exchange reserves. The forex reserves were reported at USD 17.79 bn in the recent week ended September 10, 2011 lower from USD 18.06 billion on WoW basis of which reserves held by the SBP fell to USD 14.34 bn while those held by commercial banks stood at USD 3.45 bn.

Market Outlook:

Buy on dips.