KARACHI - The Karachi Stock Exchange (KSE) witnessed a net inflow of $63 million in the first six months (January-June) of current calendar year (2011), showing a decline of 77 per cent when compared with $271 million reported over the same period of last calendar year. The slow down in foreign activity and record low volumes at KSE are considered as major causes of reduction in the flow of portfolio investment during the period under review. According to data compiled by Topeline Research, total foreign activity during Jan-Jun stood at $750 million (gross buy of $406m and gross sell of $345m) which is almost 29 per cent lower than $1.1 billion in the same period last year. With volumes in local bourse shrinking to 9-year low levels, foreign flows, an important indicator to gauge market depth and strength, have also declined. The decelerating trend in foreign activity was seen across the developing economies due to soaring inflationary pressure and high interest regimes. The same trend was replicated in local bourse where foreign activity was seen declining in last 6 months also due to limited trading activity at Pakistan market, said Topeline report issued Wednesday. The report stated that after huge foreign inflows seen in developing markets including Pakistan last year, the foreign fund managers seem to have started to reduce their exposure to these markets. This is linked to cautious stance by global investors after concerns over rising inflation in these economies resulting into high interest rate scenario. Subsequently, reduced inflows were witness across Asia which includes countries like China, India, Vietnam, Korea, Taiwan and Thailand. During this period under review, India, the fastest growing economy in South Asia, attracted foreign net inflows of a mere $293 million as against $6.9 billion in the same period last year, the report mentioned. The investors, at local equity market, have opted to remain on the sidelines on account of heightened uncertainty on the political and economic canvas, it said. The investor confidence has been further shattered by re-imposition of the CGT (Capital Gain Tax) and its cumbersome calculations. As a result foreign flows were affected as offshore investors found difficult to execute their desired orders at KSE, it added.