KARACHI - Eighty eight days have passed so far since the imposition of floor mechanism on August 27, 2008, but the full pace of withdrawal of foreign investment could not be reduced as the foreign investors have ejected $641 million from the equity markets in the first four months (July-November) of the fiscal year 2009. Amid no clarity as to when the price floor mechanism will come to an end, investors both foreign and local continued to show significant activity in the off-market (OTC market) during the last two months, where there is no price floor. According to the NCCPL, the off market transactions of foreign investors during the first four days of the outgoing trading week saw a net selling US$3.8 million though at a substantial discount to the official closing price. As a result, cumulative net selling for the current month increased to reach US$8.1 million. In September, foreign investors had withdrawn $96 million, reflecting an increase of $68 million versus $28 million outflow witnessed in a month earlier (August). While inflow during Sept-08 was recorded at US$82 million, data issued by State Bank of Pakistan (SBP) said. In the first half of October-08, foreign investors have pulled out $29million. While Cumulative inflow in the same period recorded at $25 million. On November, 21, 2008 the SBP reported that the net flow of the portfolio investment has landed into negative by US$264 million from July to date, which indicates further erosion of foreign investment. During the period under review the share markets witnessed cumulative inflow of $377 million. While during the twenty-one days of current month the foreign investors have so far pulled out $9.24 million from the share markets and the inflow recorded at $8.84 million. Those who closely watch the activities of Pakistani Market linked the huge withdrawal of foreign investment to deteriorating law and order situation, economic weaknesses, like dwindling forex reserves of the country, devaluation of rupee against US dollar, uncertainty about the removal of floor mechanism coupled with the unprecedented financial turmoil in the US, which sent shock waves to all other leading capital markets of the globe. Analysts held a view that the prolong period of floor rule and uncertainty about its removal had sent a negative signal to the foreign investors and those who were still trapped in the market, were waiting for lifting of floor from the market to make an exit. Initially the foreign investors and Mutual Fund industry of the country had put pressure on the regulators both KSE board and SECP over the removal of floor but with the passage of time the battered local investors, stood against the floor rule, who initially were in favour of the floor mechanism. Despite the several meetings between the top government officials and KSE board, no formal decision has been taken so far about the exact date for the removal of floor mechanism and the injection of market support fund, resulting anxieties of local investors further deepened and a strong lobby of the KSE members got down to launch a protest against the unconcerned attitude of government. Brokers said the government had fear that once the floor rule removed, the huge withdrawal of foreign investment would be seen in the government owned companies including OGDCL, National Bank and National Investment Trust, thus the government has been intentionally hanging on the removal of floor rule to avoid considerable decline in the share prices of government owned scrips. A major outflow of portfolio investment had been recorded from the USA, United Kingdom, Switzerland, Singapore, Hong Kong and Australia. According to the State Bank of Pakistan (SBP) data, the USA investors withdrew $353 million, UK $116 million, Switzerland$ 64million, Singapore$21 million, Hong Kong $44 million, and Australia $15 during July- to date.