China emerged as the largest foreign investor in Pakistan in January 2026, recording net direct investment of $72.61 million, according to the latest data issued by the State Bank of Pakistan. The monthly figures place Hong Kong and Switzerland as the second and third largest contributors, with net inflows of $24.66 million and $17.46 million, respectively, underscoring continued regional interest in Pakistan’s economy despite broader fluctuations in capital flows.
The January snapshot highlights China’s continued prominence in Pakistan’s foreign direct investment landscape. On a cumulative basis for the first seven months of FY25, China retained its position as the largest investor, followed by Hong Kong and the United Arab Emirates. During this period, China’s net FDI reached $495.52 million, Hong Kong contributed $188.43 million, and the UAE invested $126.25 million.
Total foreign direct investment during 7MFY25 stood at $981.36 million, marking a 40.91 percent decline compared with $1.66 billion recorded in the same period of FY24. The contraction signals a more cautious investment environment relative to last year, reflecting shifting global capital flows and domestic economic adjustments.
China accounted for the largest share of direct investment during 7MFY25, representing 50.49 percent of total FDI. However, inflows from China declined by 42.19 percent year-on-year from $857.13 million in 7MFY24, indicating that while China remains dominant in relative terms, absolute investment levels have moderated significantly.
Hong Kong’s share in cumulative FDI during 7MFY25 stood at 19.2 percent, with net inflows of $188.43 million. This represented a 35.18 percent decline compared to $290.69 million in the corresponding period last year. The UAE ranked third, contributing 12.86 percent of total FDI with $126.25 million, reflecting a 28.95 percent year-on-year decrease.
Other notable sources of direct investment during 7MFY25 included Switzerland, categorized investors under “Others,” and the United Kingdom. Switzerland recorded net FDI of $124.23 million, while the “Others” category contributed $86.15 million and the UK added $64.39 million over the seven-month period. These diversified inflows illustrate continued engagement from multiple jurisdictions, even as aggregate figures trend lower.
Foreign Portfolio Investment, which tracks equity market participation both direct and indirect, painted a mixed picture. In January alone, FPI recorded a net inflow of $136.72 million, signaling renewed short-term interest in Pakistan’s capital markets. However, cumulatively during 7MFY25, portfolio flows reflected a net divestment of $463.92 million. This compares with a net divestment of $176.99 million in the same period last year, indicating heavier outflows on an annual basis.
Within portfolio flows, the “Others” category emerged as the largest investor during January, with inflows of $11.14 million in the month and $10.4 million during 7MFY25. The data reflects selective participation in the equity market, even as broader portfolio flows remain volatile.
Total foreign investment, combining direct and portfolio components, stood at $310 million during the review month. On a cumulative basis, total foreign investment during 7MFY25 reached $517.43 million, substantially lower than the $1.48 billion recorded in the corresponding period last year.
The latest figures highlight a nuanced external investment environment. While China continues to anchor Pakistan’s FDI inflows and January saw positive portfolio momentum, the cumulative decline in both direct and total foreign investment underscores ongoing pressures in the broader capital flow landscape. Sustained recovery in inflows will depend on macroeconomic stability, policy continuity, and investor confidence in the months ahead.
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