During the month of February 2020, huge foreign selling was seen at the Pakistan Stock Exchange (PSX) as offshore investors offloaded shares worth $56 million on a net basis.
This is the highest monthly selling recorded after a gap of 15 months, a research report of Sherman Securities said.
Given the fact that foreigners are estimated to hold one-third of free-float, huge selling by foreigners led to 9.0 percent fall in the KSE-100 Index in February 2020. We relate huge selling by foreigners and sharp decline in Index to global sentiments in equity markets as concerns on the global outbreak of COVID-19 (Corona Virus Disease 2019) intensified in February 2020.
This has created a panic like situation in equity markets across the globe as investors fear a slowdown in global demand during the rest of 2020, the report said.
However, despite the fact that Pakistan is largely insulated from the economic impact of COVID-19, the KSE-100 Index stood out as the third-worst performing Asian emerging market (as defined by MSCI) in February 2020, it added.
Indonesia remained the worst-performing market amongst 9 MSCI Asian emerging countries followed by Thailand. Similarly, the MSCI world posted a negative return of 7.0 percent in February. Amongst major sectors, oil stocks remained worst performers amid a sharp decline of 11 percent crude oil prices during February.
Out of $50.2 million net selling in February (excluding February 28 figures), foreigners remained net sellers in oil stocks ($14.4 million) which resulted in huge underperformance in the sector. Moreover, net selling of $14.9 million and $12.7 million was recorded in Cement and Bank sectors (on a net basis), respectively.
According to current data of portfolio investment, an outflow of $21 million was recorded during the outgoing week.
