Portfolio investment growth sees 927pc jump in January

Net foreign investment in stocks marked a significant jump of 927 per cent year-on-year in January this year as overseas investors consider the Bangladesh stockmarket lucrative for long-term investment.
An analyst said the favourable macroeconomic indicators coupled with political stability increased the foreign investors' confidence and encouraged them to put fresh funds in the securities.
The overseas investors bought shares worth Tk 6.11 billion, while they sold stocks of Tk 4.25 billion in January 2017, to take their net investment for the first month of the year to Tk 1.86 billion, according to statistics from the Dhaka Stock Exchange (DSE).
In January, 2016, the net foreign investments was negative Tk 225 million as the foreign investors bought shares worth Tk 3.23 billion and sold shares worth Tk 3.45 billion.
"Foreign investment in our capital market is gradually increasing and the trend will continue in the coming days too as the market offers discounted rate of many fundamental stocks," said a DSE official.
Foreign fund managers see the Bangladesh stock market as one with potential among the emerging markets due to positive macroeconomic indicators and a stable political scenario in recent months, said a local stockbroker who deals with foreign investors.
"Lucrative dividends declared by other multinational companies also encouraged the investors to park money in the securities," he said.
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".
Analyse the country's economic factors, he noted that declining interest rate, overall market liquidity and company's earnings condition is very favourable for foreign equity investors.
Mr Riadh said that among the frontier markets, Bangladesh did better in terms of declining interest rate, strong currency and GDP growth.
"Extreme anxieties that persisted in the previous years from both the fiscal, monetary and political frontiers were absent in last one year which have given huge comfort to foreigners," he added.
Mr Riadh expects 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 January, DSEX, the prime index of the DSE, registered a cumulative gain of 432 points or 8.58 per cent. The month-long rally was largely driven by NBFIs and banks, which gained 30 per cent and 18 per cent respectively.
The daily turnover, an important gauge, stood at Tk 14.86 billion on average, in January, 2017.
However, month-on-month, net foreign investments in stocks fell 51.68 per cent in January, 2017 compared to December 2016.
In December 2016, the overseas investors bought shares worth Tk 6.80 billion and sold shares worth Tk 3.85 billion, to take their net investments to Tk 3.85 billion.  
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.
Foreign investors include global investment banks like Morgan Stanley, JPMorgan, Goldman Sachs and BlackRock.
In 2016, net foreign investments at DSE stood at Tk 13.40 billion, which was 1.85 billion in 2015.
Foreign investment accounts for less than 2.0 per cent of the premier bourse's total market capitalisation, which stood at Tk 3,673 billion as of Wednesday.
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