Net foreign funds see negative trend after seven FYs

Net foreign fund in stocks witnessed negative trend in the outgoing fiscal year (FY) after seven fiscals as overseas investors booked profit by selling shares.
Foreign investors bought shares worth Tk 40.17 billion while they sold Tk 42.01 billion worth of shares in the FY 2018-19, taking the net position of Tk 1.84 billion negative, according to data available with the Dhaka Stock Exchange (DSE).
The net foreign investment in DSE was also negative in nine months out of 12 in the outgoing fiscal year as overseas investors were mostly on selling mood.
In the FY 2017-18, the overseas investors' net position was Tk 717 million, as they purchased shares worth Tk 59 billion and sold shares worth Tk 58.28 billion, the DSE data shows.
Market analysts said the foreign investors sold shares in line with the local investors amid lack of confidence and dearth of quality stocks.
Foreign investors look for companies that performed well, maintain good governance and have growth potential.
"But we failed to provide them a long list of such companies," said an analyst at a leading brokerage firm.
He noted that researchers can recommend names of only 30 to 35 companies, out of more than 300 listed, to meet foreign investors' criteria.
He emphasised to bring quality stocks to attract foreign investors as well as increase the depth of the country's capital market.
A local stockbroker, who deals with foreign investors, said depreciation of local currency against the US dollar was another reason for withdrawal of funds by the foreign investors.
He noted that the telecom regulator's move declaring Grameenphone as a Significant Market Power (SMP) also played a big role in dampening the confidence of the foreign investors.
However, he said, the foreign investors are not the market drivers of the country's capital market as they make up less than 2.0 per cent of DSE's total market-cap, also lowest among South Asian countries.
DSEX, the benchmark index of the premier bourse, however, advanced only 16 points in the outgoing fiscal year.
The daily turnover, another important gauge, stood at Tk 6.14 billion on an average, down by 5.0 per cent over the previous fiscal's Tk 6.46 billion.
In 2018, net foreign funds in stocks were in the negative Tk 5.93 billion as nine months out of 12 were in the negative territory. The overseas investors bought shares worth Tk 44.96 billion and sold shares worth Tk 50.89 billion in 2018.

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