Net foreign investment in Dhaka bourse hits a new high

Net foreign investment into the Dhaka bourse hit a new high of Tk 5.72 billion in April, 2014 as foreign fund managers considered the market lucrative for long-term investment due to low prices of fundamentally strong stocks.
The easing of political tension and favourable macro economic indicators attracted foreign investors to take position in stocks, especially multinational companies stocks throughout the April, said local stockbrokers, who deal with foreign investors.
Overseas investors bought shares worth Tk 8.76 billion and sold shares worth Tk 3.04 billion in April, 2014, taking their net investment of Tk 5.72 billion, according to the statistic from the Dhaka Stock Exchange (DSE).
It was a new high of net foreign investment in the last three years since 2010, so far, DSE officials said.
In March, 2014, net foreign investments was Tk 969.63 million as foreign investors bought shares worth Tk 2.05 billon and sold shares worth Tk 1.08 billion, the DSE data showed.
Consequently, the month-on-month, net foreign investments jumped 490 per cent in April, 2014 compared to a month ago, the DSE data showed.
"The DSE marked a significant jump in foreign investment in April compared to March, 2014 as foreign fund managers considered the market lucrative for long-term investment due to low prices of fundamentally strong stocks," said a local stockbroker.
"Foreign investors showed interest on Bangladesh capital market due to favourable macro economic indicators and easing of political tension in recent months," said Md Ashaduzaman Riadh, strategic portfolio manager of LankaBangla Securities, a local stockbroker that deals with foreign investment.
The political stability will help revive corporate profitability of listed companies and liquidity situation in the market, he said.
"Foreign fund managers increased allocation to the frontier markets to take the advantage of favourable macro indicators and low correlation of those markets with the US, Europe and emerging markets," Mr Riadh added.
"Foreign investors are injecting fresh funds amid positive speculations, as the investors think that this is the right time to invest in the Bangladesh's stock market and the market is lucrative for long-term investments," Akther H Sannamat, managing director of Union Capital said.
The stable current political situation and no tough political programme in near future encouraged the investors to take position, said Mr Sannamat, also vice president of Bangladesh Merchant Bankers Association (BMBA).
However, he stressed long-term political stability, improvement in power and infrastructure, macroeconomic equilibrium to attract more investment into the country.
Foreign investment, also known as portfolio investment, accounts for around 1 per cent of DSE's total market capitalisation, which stood at Tk 2,917.98 billion as on Sunday.