Vanguard, a fund benchmarked to the FTSE index, has significantly reduced its holdings in Pakistani stocks, selling approximately $135 to $145 million worth of shares by mid-October 2024. This move follows the reclassification of Pakistan from a Secondary Emerging to a Frontier Market by FTSE Russell, effective September 23, 2024, due to Pakistan’s failure to meet stock count criteria.
According to Topline Securities, Vanguard initially sold around $82.5 million worth of stocks by the end of September 2024, out of a total position valued at $165 million based on current market prices. In the first two weeks of October, an additional $60 million worth of stocks were sold, bringing the total to between $135 and $145 million.
The fund has fully divested from Systems Limited, selling 1.8 million shares, and has offloaded 96 percent of its position in OGDC, amounting to 25 million shares out of a total of 26.3 million. Additionally, Vanguard sold 84 percent of its holdings in EFERT, totaling 18.4 million shares from a total of 21.8 million.
As of September 2024, Vanguard retained 11 percent of its position in PSO, holding 11.4 million shares out of 12.8 million. The fund also maintained positions in PPL and FFC, selling 28 percent of its shares in both companies, with remaining holdings of 17.8 million and 18.2 million shares, respectively.
From October 1 to October 14, foreign investors sold $88 million in stocks, including non-FTSE stocks like COLG, valued at approximately $18 million. Adjusting for COLG, the net selling amounted to $70 million, with Vanguard accounting for 85-90 percent, or roughly $60 million, of this total. Vanguard’s remaining holdings are estimated to be between $20 and $30 million, likely including stocks such as FFC, TRG, ENGRO, MTL, and PSO, based on NCCPL FIPI data analysis.
Despite the substantial sell-off, local mutual funds have absorbed the impact, with net buying of $86.2 million from September 2024 to date, followed by companies with net inflows of $25.3 million. The market outlook remains positive, with expectations of reaching 106,000 by June 2025, offering a potential return of 24 percent.
