Portfolio investment drops 18pc

Net foreign investment on the Dhaka Stock Exchange (DSE) fell 18 per cent in January this year compared to the same month last year, as foreign fund managers adopted  'go slow' strategy due to political unrest across the country.
Foreign investors bought shares worth Tk 3.65 billion and sold shares worth Tk 1.36 billion to take net investment to Tk 2.28 billion in January this year, according to statistics from the Dhaka Stock Exchange (DSE).
In January 2014, portfolio investors bought shares worth Tk 4.03 billion and sold shares worth Tk 1.24 billion making a net investment of Tk 2.78 billion, the DSE data showed.
"Foreign investors were cautious about taking fresh positions, particularly in large-cap stocks due to political unrest across the country since early January this year," said a leading stock broker who deals with portfolio investment.
He said that though the country's economic indicators showed positive sign, the month-long political unrest forced the foreign investors to adopt 'go slow' strategy like local investors.
"The foreign investors keenly observed the country's political developments as political unrest eat-up companies' profitability, resulting lower dividend," he said.
Stock indices also declined last month. DSEX, the benchmark index of the premier bourse, plunged 140.89 points or 2.89 per cent over the month to close at 4,724.04 points last month.
Akter H Sannamat, managing director of Union Capital said that the foreign investors followed 'go slow' strategy like local investors as political front remained cloudy.
The foreign investors are 'watching' the market movement and want a solution of political uncertainty, he said.
He stressed political stability, improvement in power and infrastructure, macroeconomic equilibrium and conducive policies to attract more portfolio investment into the stocks.
However, month-on-month net foreign investment increased by 6.04 per cent in January 2015, compared to a month ago.
Also known as portfolio investment, foreign investments accounted for around 2 per cent of DSE's total market capitalisation of Tk 3140.82 billion as of Sunday.
Foreign investors' preferred sectors are: banks, non-bank financial institutions, power and energy, pharmaceuticals, telecoms and IT, an investment banker said.
They also focused on some multinational stocks that announced healthy dividends and generated good profits, he added.
In 2014, foreign investors bought shares worth Tk 44.06 billion and sold shares worth Tk 17.98 billion to take their net investment to Tk 26.08 billion, which was a record high, according to DSE statistics.
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