KARACHI, Jan 23: Two pieces of good news coming out of the Karachi Stock Exchange on Wednesday, provided fodder for optimists who have been predicting the return of the bulls.

The KSE-100 index crossed the 1,500 points barrier to close at 1501.07 points at the end of trading on Wednesday. Stock exchange officials were out with a congratulatory note, saying that the index had crossed the 1,500 barrier for the first time in eleven months; the last time it accomplished that feat was on February 19, 2001, when it hit 1,511.62 points. Would it head further to the north? Stock brokers and analysts generally agreed that it would.

The other information released by the exchange was in respect of purchase and sale of shares by foreign investors during November and December. While the November figures of portfolio investment were noted to have gone the old way with net outflows of Rs841 million or $14 million (sales valued at Rs1.240 billion, compared with purchases worth Rs399 million), the trend took a turn for the better in December.

In December, foreign investors bought more shares — both in terms of number and value, than they sold. Purchases stood at 20.4 million shares worth Rs534 million, compared with sales of 14.2 million shares of the value of Rs311 million, so that the net purchases of equities by foreign investors stood at Rs223 million or $4 million. The last time foreigners had decided to buy more of Pakistani stocks than sell, was way back in April 2001.

Several factors could be attributed to the rise of index and the change of heart by the foreign funds. The KSE-100 index was at its lowest on the eve of the new year, at 1,322 points; though having recovered from its October 2, 2001 lowest of 1,075 points. At the time Pakistan’s political and economic risks were at the highest in the aftermath of the September 11 events, followed by the US-led strikes on Afghanistan. Having now come to terms with the war rhetorics along the Indian border, investors seem to be lured more to the benefit of low valuations of the Pakistani stocks, then risks involved. Other reasons touted by analysts that made equity investment look more attractive, were the falling fixed income yields (Taurus) and expected shrinkage of T-Bill, PIB and badla rates by 50-100 basis points (InvestCap).

And there is more. A seven-member delegation led by chairman, Securities and Exchange Commission of Pakistan (SECP), Khalid Mirza, is now in London. With the mission to create awareness about the growing investment opportunities in Pakistan to foreign investors, especially the Pakistani expatriates, the delegation first visited the expatriate community in UAE and Saudi Arabia.

According to the SECP officials in Islamabad, the delegation (comprises mainly the capital market experts) had managed to generate a great deal of interest among those potential investors. They were appraised about the changed governance structure in the country; the structural economic reforms and the market and regulatory reforms carried out by the SECP that ensured protection of investors and transparency. “The positive surge in the stock market these days may be attributed to the efforts put in by the delegation abroad, as there has been news of selective foreign buying,” SECP officials claimed on Wednesday.