The foreign portfolio investors were more active in the country's stock market in the just concluded fiscal year (2007-08) than the previous fiscal with their investment rising by nearly 37 per cent.
According to data available with the Dhaka Stock Exchange (DSE), the total turnover of the foreign investors increased by more than 94 per cent to $ 274 million in the last fiscal as against $ 141 million in the fiscal 2006-07.
The net portfolio investment, however, posted a decrease by 50.10 per cent to $46 million in the last fiscal compared to $ 93 million a year earlier.
The foreign investors in the last fiscal bought stocks worth $160 million and disposed of the same worth $ 113 million in a bullish market. In the year 2006-07, they purchased shares worth $ 117 million and sold the same valued at about $23 million, meaning that they, in 2007-08, disposed of most part of the shares bought at lower prices earlier.
"The drop in net investment position in 2007-08 does not necessarily mean the foreign fund managers have lost their interest in the Bangladesh stock market. It is evident from their more active participation in the previous fiscal," said Saiful Islam, one of the leading foreign portfolio managers in the country's stock market.
Many foreign portfolio investors are waiting for the market correction. A number of world's leading investment banks are now focusing on Bangladesh's growing stock market. The market capitalisation was equivalent to 16 per cent of the country's gross domestic product (GDP) in 2007 as against 6.0 per cent in 2006, he added.
Moreover, the global fund managers are restructuring their investment in the event of present overpriced stocks of different sectors, noted Saiful, also the senior vice president of the DSE.
Saiful, however, hoped that the portfolio investment will go up after August when the global fund managers make decisions on their international investment destinations.
To attract the portfolio investment which is one of the vehicles of the growth for an emerging stock market like Bangladesh, he said, the coordination among the relevant government agencies is required.
Governor of the Bangladesh Bank Saleh Ahmed recently in a function said that the central bank was putting its effort to make Foreign Exchange Regulations time-befitting in order to increase the inflow of foreign direct investment (FDI) and portfolio investment.
A capital market analyst Yawer Sayeed said one of the stumbling blocks slowing down the inflow of foreign portfolio investment is the lack of depth of the market.
"Foreign investors want growth-oriented market and always look for new quality issues like those of telecommunication, infrastructure and utility sectors," he said, adding that a steady market growth and political stability are also pre-requisites for wooing foreign investors.
From mid-2006, the world fund mangers, mainly from EU countries, began to enter the Bangladesh stock markets.
Currently, the total market capitalisation of the DSE stands at $ 13 billion, which was below $ 5.0 billion in 2006.
The benchmark DSE General Index saw a record 396 per cent rise in turnover and 139 per cent increase in value in the past year.
