KARACHI, Nov 14: Foreign investors pulled back $88 million from the country’s equity market in the first three trading days this week, including which the outflow of total foreign portfolio investment stood at the staggering sum of $165 million since imposition of emergency in the country on Nov 3.

The State Bank of Pakistan would release the latest SCRA figures — that show the foreign investors stake in the market -- on Thursday, but fund managers came up with their own conclusions.

“On Friday the foreign investors held an investment portfolio of $224 million, which has shrank to $135 million by the close of trading on Wednesday”, says a private fund manager. He recalled that the overseas investors’ had ploughed $300 million in stocks in the current fiscal year until Nov 1. But in the nine days up to Wednesday, $165 million had evaporated, leaving $135 million in the equity market.

Analysts said that another $51 million had been withdrawn by the foreigners from money market (T-Bills).

“Uncertainty” was the key word. “Uncertainty on the future course of events on the political front was driving investors away,” says an equity strategist, adding that most people were comfortable with economics, given the government projected healthy economic growth, reserves, remittances and corporate earnings numbers.

But there were worries. Both Moody’s and S&P had downgraded Pakistan’s credit rating outlook from stable to negative; the Commonwealth factor and the reported decisions by a few foreign industrial investors to cut down the size or put their expansion projects on the hold, could hardly boost equity investors’ confidence.

Some stocks on the banking, cement and insurance had already lost 15-20pc of their value.

Although glum faces could be seen all around the corridors and the trading hall of the stock exchange, many brokers were still selling optimism. “Things are not as bad as they were expected to be,” says Haji Ghani Haji Usman, a sitting director on the KSE Board.

He argued that the market had been gripped by fear on the day the emergency was clamped, believing the KSE-100 index to plummet by 2,500 or more points, but all that the market had seen was a fall of 800-odd points.

Some stock brokers were sore that the happy conclusions on the waiver of capital gains tax, drawn in their meeting with Prime Minister Shaukat Aziz on Friday had come to naught. The announcement of dissolution of National Assembly came only the day after. “How do we know that the interim government would carry on with the decisions?” grumbled a member.

With the black out of real-time news from credible electronic media, every rumour monger was making money, while investors were losing it. “The statement of President Musharraf to a foreign news channel stating that he had “considered” resigning” was translated by the rumour mongers in the market as he was “considering” resigning, which saw a free fall of shares on Wednesday.

Analysts said that the Pakistani stocks were trading at attractive valuations of 10.5 times of the earnings, compared with regional average of 16 and Indian market price-to-earnings of 19 times. “But for the moment foreign fund managers are treading cautiously due to the rise in systemic risk,” says Khurram Schehzad, analyst at stock brokerage firm InvestCap.