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Net foreign fund at DSE sinks in April

Foreign investors book profit, follow 'go-slow' strategy

Babul Barman | May 04, 2018 00:00:00

The net foreign investment in the Dhaka bourse turned negative in April, after a month's break, as the foreign fund managers followed a 'go-slow' strategy.

The overseas investors collected shares worth Tk 5.03 billion but sold shares worth Tk 5.28 billion last month, resulting in their net position negative by Tk 247 million, according to statistics available with the Dhaka Stock Exchange (DSE).

In March, the foreign investors' net position was Tk 1.57 billion, as they purchased shares worth Tk 4.56 billion and sold shares worth Tk 2.99 billion, the DSE data shows.

Meanwhile, the overseas investors' net position was also negative Tk 947 million in February, as they brought shares worth Tk 3.93 billion and sold shares worth Tk 4.88 billion, according to the DSE statistics.

"The foreign investors followed a 'go-slow' strategy in April and slow in making the purchase while some booked profit," said a stockbroker who deals with foreign investors, preferring anonymity.

He noted that there was no big reason for the fall, adding that the foreign fund managers still see the Bangladesh stock market as a potential one among the emerging markets due to positive macroeconomic indicators.

DSEX, the benchmark index of the premier bourse, however, added 142 points or 2.53 per cent during the month.

"The foreign investors booked profit by selling some shares, taking their net position in negative territory," Mostaque Ahmed Sadeque, president of the DSE Brokers Association told the FE.

Mr. Sadeque, also managing director of Investment Promotion Services, said foreign investors were optimistic and willing to invest in the market as the market situation was improving after solving the liquidity problems.

However, he said, the foreign investors were not the market drivers as their investment makes up less than 2.0 per cent of DSE's total market cap.

Foreign investors' preferred sectors were banks, non-bank financial institutions, power and energy, pharmaceuticals, telecoms and IT, said a merchant banker.

They also focus on some multinational companies that announced healthy dividends and generated good profits, he added.

In 2017, the overseas investors bought shares worth Tk 65.76 billion while they offloaded stocks worth Tk 48.71 billion to take their net investment to Tk 17.05 billion, the DSE data shows.

In 2016, the net foreign investment was Tk 13.41 billion, as the foreign investors collected shares worth Tk 50.57 billion and sold shares worth Tk 37.16 billion.

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