Foreign funds in stocks jump 39pc in March

Net foreign investment in stocks marked nearly 39 per cent rise month-on-month in March this year as overseas investors parked more funds in stocks, anticipating positive market scenario.
Market insiders said the favourable macroeconomic indicators, including declining interest rate coupled with political calm boosted foreign investors' confidence to inject fresh funds in the securities.
Foreign investors bought shares worth Tk 7.11 billion and sold stocks of Tk 3.81 billion to take their net investment to Tk 3.30 billion in March, according to statistics from the Dhaka Stock Exchange (DSE).
It was also the highest net foreign investment in three months since December 2016, when net foreign investment was recorded Tk 3.85 billion.
In February, net investment by overseas investors was Tk 2.38 billion, as they bought shares worth Tk 4.35 billion and sold stocks worth Tk 1.97 billion.
A DSE official said foreign investment in the premier bourse is gradually increasing and the trend will may continue in the coming days too as market offers discounted rate of many fundamental stocks.
"Foreign fund managers see the Bangladesh stockmarket as one with potential among the emerging markets due to positive macroeconomic indicators and a stable political scenario," said a local stockbroker who deals with foreign investors.
"Lucrative dividends declared by the listed multinational companies also encouraged the investors to park money in the securities," he said.
Some multinational companies already declared hefty cash dividend for the year ended on December 31, 2016. BATBC declared 600 per cent cash dividend, while GlaxoSmithKline 500 per cent, Linde BD 310 per cent, Heidelberg Cement 300 per cent and GP declared a total of 175 per cent cash dividend.
Md Ashaduzaman Riadh, strategic portfolio manager of LankaBangla Securities, said, "Sustained revival of the foreign investors' interest was backed by the rising corporate profitability and increasing consumption level of Bangladesh".
Mr Riadh said, "If we analyse the economic factors -- first, in the way that they affect interest rate and overall market liquidity, and, second, in the way that they affect company earnings -- conditions were very friendly for the equity market".
He noted that among the frontier markets, Bangladesh did better in terms of declining interest rate, strong currency and GDP growth.
Mr Riadh expects that large-cap companies with attractive valuation on which foreigners have high interest will strongly come back with top and  bottom line growth in 2017 and Bangladesh market is expected to get higher weight from foreign investors.
During the month of March, DSEX, the prime index of the DSE, registered a cumulative gain of 107 points or 1.90 per cent.
The year-on-year net foreign investments in stocks also jumped 131 per cent in March 2017 compared to the same month in 2016.
In March 2016, the overseas investors bought shares worth Tk 3.71 billion and sold shares worth Tk 2.77 billion to take their net investments to Tk 945 million.  
Banks shares were the top choice of foreign investors, who also seemed interested in power and energy, non-banking financial institutions, telecom, pharmaceuticals, multinational companies and IT companies.
In 2016, net foreign investment at DSE was Tk 13.40 billion, which was 1.85 billion in 2015.
Also known as portfolio investment, foreign investment accounts for less than 2.0 per cent of the DSE's total market capitalisation, which stood at Tk 3,823 billion as of Monday.
babulfexpress@gmail.com