Net foreign investment in the Dhaka Stock Exchange (DSE) dipped by 86 per cent in February compared to January, 2015 as foreign fund managers were in selling spree amid ongoing political unrest.
Foreign investors bought shares worth Tk 2.50 billion and sold shares worth Tk 2.19 billion, taking their net investment to Tk 317.40 million in February, according to statistics from the DSE.
In January, overseas 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, the DSE data showed.
It was also the lowest single-month net foreign investment in DSE for the last six months since August, 2014. In August 2014, net foreign investment was Tk 124.56 million, the DSE statistics showed.
"The net foreign investment in DSE fell drastically in February as foreign fund managers were in selling mood throughout the month amid prolonged political unrest," said a leading stock broker who deals with portfolio investment.
He said that the foreign investors always want to see a peaceful and stable political environment for their investment. "As the country's political situation deteriorated, they went for selling spree to book profit," he added.
"The foreign investors also keenly observed the country's political developments as political unrest eat-up companies' profitability, resulting lower dividend," he said.
Stock indices, however, remained flat in February. DSEX, the benchmark index of the premier bourse, gained 39.17 points or 0.82 per cent over the month of February.
Akter H Sannamat, managing director of Union Capital said that the foreign investors went for selling spree as political outlook remained cloudy.
The foreign investors are 'watching' the market movement and want a peaceful solution of political uncertainty, he said.
He stressed the need for political stability, improvement in power and infrastructure, macroeconomic equilibrium and foreign investors-friendly policies to attract more portfolio investment into the stocks.
Also known as portfolio investment, foreign investments accounted for around 2 per cent of DSE's total market capitalisation of Tk 3,210.31 billion as of Sunday.
Banks, non-bank financial institutions, power and energy, pharmaceuticals, telecoms and IT are the preferred sectors of portfolio investors, 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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