Coronavirus Panic: Foreign Investors Began to Withdraw their Investment

During the current fascial year 2020, foreign investors deprived some $1.8 billion investment of the government debt instruments. In the opinion of economists, due to the coronavirus pandemic on a global level, international markets are witnessing a huge collapse and foreign investors are divesting their portfolios despite the asset class of geography.

Coronavirus has created such a panic that foreign investors are withdrawing their investments to save their money.

As per the recent official statement of State Bank of Pakistan (SBP), cumulatively foreign investors offloading around $1.873 billion from their investments in the government securities – Market Treasury Bills (T-Bills) and Pakistan Investment Bonds (PIBS) – during 1st July 2019 to March 23, 2020 period.

The data released by Special Convertible Rupee Account (SCRA) shows that some $1.833 billion were stripped from T-Bills and $ 40 million from PIBs during this fiscal year. The major selling of $1.639 million was made by UK-based investors from T-bills. While the remaining investments in the government securities were withdrawn by the US, Bahrain, and Ireland based investors.

With $3.492 billion inflows and $ 1.873 billion outflows, net foreign investment in the government’s debt instruments, including T-Bills and PIBs stand at $ 1.619 billion during FY20. Most of the investment amounting to $3.43 billion was arrived in short-term government papers, while the remaining $61 million was attracted by PIBs.

On March 23, there were no fresh inflows in any government security and entire transactions were made for divestment. According to the SBP, foreign investors divested some $95million (net) from the investment in T-Bills on March 23, 2020. Cumulatively, with this repatriation, total divestment during March 2020 has reached $1.5 billion against inflows of $18.4 million.

Speaking to the media, SBP Governor Dr. Reza Baqir said, “Globally foreign investors are taking precautionary measures and divesting investments from government securities to the dollar, which seems the most secured.”

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