The portfolio investment on the country's prime bourse has increased 21.1 per cent in November as foreign fund managers now consider the market lucrative for long-term investment due to low prices of fundamentally strong stocks.
The local investors were in the mood to sell in anticipation of political unrest, but foreign buyers went on a buying spree, as they found the time just right to take positions at lower prices.
The month-on-month net investment rose by 21.1 per cent to Tk 2.76 billion in November, the highest net investments in the last four month - July, August, September and October in the current fiscal year, according to DSE statistics.
Foreign investors bought shares worth Tk 3.42 billion and sold shares worth Tk 657.16 million to take their net investment for the month to Tk 2.76 billion in November, according to data from Dhaka Stock Exchange.
In October, they bought shares worth Tk 2.67 billion and sold shares worth Tk 384.99 million, resulting in net investment worth Tk 2.28 billion for the month.
Foreign fund managers see the Bangladesh economy and the stock market as emerging ones, despite political volatility in the country, said a local stockbroker who deals with foreign investors.
Local stock brokers, who trade on behalf of the foreign investors, said the stock prices came down to a lucrative level during the period, due to a bear run that started in 2011.
They expect more foreign investment in future, as the central bank allowed local stock brokers to share profit on trading commission with the foreign stock brokers, who trade from abroad on behalf of the foreign investors.
Previously, profit-sharing on trading commission was not allowed, which discouraged foreign stock brokers from participating in the country's capital market.
Akter H Sannamat, managing director of Union Capital told The FE: "Although the country is facing political unrest in recent times, the foreign investors are very optimistic with the economic potential and bought shares throughout the month of November."
"Portfolio investment marked a rise as the investors think that this is the right time to invest in the Bangladesh's stock market and the market."
The market indices saw a downward trend last one week of the November due to a shaky political situation. "But the foreign investors thought it was a good time to take positions in securities at lucrative prices," he said.
He also said the future prospect of foreign investment is promising. "Investment will rise in future, as Bangladesh Securities and Exchange Commission is in the continuous process of attracting foreign investment."
However, he stressed political stability, improvement in power and infrastructure, macroeconomic equilibrium and foreign investors-friendly policies to attract more investment into the country.
Foreign portfolio investment in Bangladesh stock markets is very low compared to other countries in Asia.
Power and energy were the foreign investors' preferred sector, but non-bank financial institutions, pharmaceuticals, multinational companies; telecom and IT also caught their attention, brokers said.
Foreign investment, also known as portfolio investment, accounts for less than 1.0 per cent of the total market capitalisation of the DSE.
Portfolio investment up 21.1 per cent
Babul Barman | Published: December 02, 2013 00:00:00 | Updated: November 30, 2024 06:01:00
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