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Foreign fund in stocks keep soaring on DSE

Net portfolio investment jumps 84pc in Feb

Babul Barman | March 05, 2019 00:00:00

Net foreign investments in Dhaka bourse soared more than 84 per cent month-on-month in February as overseas investors continued to put fresh funds after the national elections.

Net foreign fund in stocks turned positive in January, 2019 after remaining negative in the past three consecutive months - October, November and December, 2018.

Market analysts said a stable political situation after the national elections pepped up the confidence level of the overseas investors and they started to invest in stocks.

The overseas investors bought shares worth Tk 5.87 billion and sold stocks of Tk 2.64 billion, to take their net investment to Tk 3.23 billion in February, according to statistics from the Dhaka Stock Exchange (DSE).

In January, 2019, the overseas investors collected shares worth Tk 4.95 billion and sold shares worth Tk 3.20 billion, to take their net position of Tk 1.75 billion, the DSE data shows.

In 2018, net foreign funds in stocks were in the negative territory of Tk 5.93 billion as nine months out of 12 passed in bearish mood. The overseas investors bought shares worth Tk 44.96 billion and sold shares worth Tk 50.89 billion in 2018.

The overseas investors started to make fresh investments after the national elections, held peacefully on December 30, 2018, said a leading merchant banker.

He expressed optimism that this year would be a positive one for the stock market if the upward movement continues and it gets policy support from the central bank.

The prime index of the DSE, however, fell 110 points or 1.89 per cent in February to close the month at 5,711, after gaining 436 points in January, 2019.

"Foreign investors are very smart -- they always invest in the capital market when the prices are on the decline," said a local stockbroker, who deals with foreign investors.

He noted that foreign investors may continue to invest in stocks in the coming months in anticipation of steady economic growth coupled with discounted rate of many fundamentally sound stocks.

However, market analyst said, it is too early to say whether the foreign investors continue their investment as depreciation of the taka against the US dollar remain a major concern.

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 look for companies that performed well, maintain good governance and have growth potential, the stockbroker said.

Delta Brac Housing Finance holds more than 43 per cent stake of foreign investors, the highest followed by Brac Bank 41.42 per cent and Olympic Industries 39.84 per cent as of January 31, 2019.

Also known as portfolio investment, foreign investment accounts for less than 2.0 per cent of the premier bourse's total market capitalisation, which stood at Tk 4,133 billion as of Monday.

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