Local Pessimism on Pakistan Stocks Lingers as Foreigners Return

(Bloomberg) -- Overseas funds returned to Pakistani stocks on Monday after the nation secured a $6 billion loan from the International Monetary Fund, even as domestic investors fueled the market’s biggest decline this year.

Foreigners bought $6.9 million of shares yesterday, the second-biggest single-day purchase this year. That’s as the benchmark KSE-100 Index fell 2.4% at close, the most in more than five months.

Foreigners “will welcome the loan’s conditions, which mean that policy is going to stay on a credible and reformist path,” said Hasnain Malik, head of equity strategy at Dubai-based Tellimer. The loan “improves foreign investor confidence,” he said.

The agreement with the IMF comes after a sixth-month period that saw rating companies downgrading Pakistan’s credit score and stocks hitting a three-year low. The slump has left the KSE-100 Index trading at a price-to-book ratio of 1.1, the lowest reading in at least a decade, according to Malik.

To contact the reporter on this story: Faseeh Mangi in Karachi at fmangi@bloomberg.net

To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net, Ravil Shirodkar, Karthikeyan Sundaram

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