Net foreign investment in DSE dips

Babul Barman | Published: June 03, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

Net foreign investment in the Dhaka Stock Exchange (DSE) marked a 77 per cent decline in May compared to the previous month, as foreign fund managers preferred to adopt a 'wait and see' strategy in the present volatile market.
Foreign investors bought shares worth Tk 3.53 billion and sold shares worth Tk 2.24 billion in May 2014, taking their net investment to Tk 1.29 billion.
In April 2014, net foreign investment was Tk 5.72 billion, as foreign investors bought stocks worth Tk 8.76 billon and sold stocks worth Tk 3.04 billion, which was a new high, according to DSE statistics.
Foreign investment, also known as portfolio investment, accounted for around 1.0 per cent of DSE's total market capitalisation of Tk 2,907.58 billion Sunday.
The foreign investors preferred power and energy sector. But non-bank financial institutions, pharmaceuticals, multinational companies, telecom and IT also caught their attention, brokers said.
Between January and May 2014, foreign investors bought shares worth Tk 19.42 billion and sold shares worth Tk 8.09 billion, taking net investment to Tk 11.33 billion, according to DSE statistics.
"Net foreign investment fell. Overseas investors followed a 'wait-and-see' policy, as the Bangladesh Bank's recent directive forced institutional investors to limit their capital market exposure," Md Ashaduzaman Riadh, strategic portfolio manager of LankaBangla Securities Ltd, told the FE.
Besides, prices of the fundamental stocks were high, and business performance of most of the listed companies was not as good as expected, which did not attract the foreign investors.
Besides, recent business performance of the banks, whose issues are considered as fundamental, did not attract them.
Although the foreign investors followed a 'go-slow' policy, they were always on the purchasing side throughout the month, he added.
AB Mirza Azizul Islam, former caretaker government adviser, said the foreign investors always want to see a peaceful and stable political environment for their investment.
The foreign investors thought that the country's political situation may deteriorate again after Ramadan. They went to sideline as an anticipatory move, as political instability would affect profit of the listed companies, said Mr Mirza Aziz, also former chairman of Bangladesh Securities and Exchange Commission.
He stressed political stability, improvement in power and infrastructure, macro-economic equilibrium and foreign investor-friendly policies to attract more portfolio investment in the market.