Net foreign funds in stocks jump 200pc in January
FE Report | Thursday, 1 February 2018
Net foreign investment in stocks marked a 200 per cent rise month-on-month in January 2018 as overseas investors poured fresh funds into the Bangladesh capital market.
Analysts said the net portfolio investment in the country's capital market increased as the market offers discounted rate of many fundamental stocks.
They said the steadily growing economy and matured market behaviour after the demutualisation of bourses encouraged foreign investors to pour their money into Bangladesh's stocks.
The overseas investors bought shares worth Tk 6.67 billion while they sold stocks worth Tk 4.80 billion to take their net investment to Tk 1.87 billion in the first month of 2018, according to statistics from the Dhaka Stock Exchange (DSE).
In December 2017, the net foreign investment was Tk 625 million as the foreign investors bought shares worth Tk 5.93 billion and sold shares worth Tk 5.31 billion.
Foreign fund managers see the Bangladesh stock market as one of the potential among the emerging markets due to positive macroeconomic indicators, said a local stockbroker who deals with foreign investors.
He noted that sustained revival of the foreign investors' interest was backed by the rising corporate profitability and increasing consumption level of Bangladesh.
"Lucrative dividends declared by some multinational companies also encouraged the investors to park money in the securities," he added.
"Foreign investors are mainly interested in buying bank shares as many bank stocks price more than doubled in 2017," said a DSE executive, seeking anonymity.
He noted that share holdings of foreign investors in private banks are also increasing, giving a boost to the prices of bank stocks.
For example, the foreign holdings of City Bank increased to 15.02 per cent in December 2017, up from 6.10 per cent in December 2016.
During the year 2017, DSEX, the prime index of the DSE, registered a cumulative gain of 1,208 points or 24 per cent. The year-long rally was largely driven by financial stocks, especially baking issues.
The daily turnover, an important gauge, stood at Tk 8.75 billion on average in 2017.
Banking 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 2017, the overseas investors bought shares worth Tk 65.76 billion while they sold stocks worth Tk 48.71 billion to take their net investment to Tk 17.05 billion.
In 2016, the net foreign investment was Tk 13.41 billion as the foreign investors bought shares worth Tk 50.57 billion and sold shares worth Tk 37.16 billion.
Also known as portfolio investment, foreign investment accounts for less than 2.0 per cent of the premier bourse's total market capitalisation, which stood at Tk 4,185 billion as of Wednesday.