While above 95% of foreign portfolio investments were made in 18 sectors, five of these sectors attracted more than 60% of their total investment
Shares in pharmaceuticals, bank and food and allied sectors attracted foreign investors the most in the Dhaka Stock Exchange throughout 2018, as their portfolio investment accounted for 6.78% of total market capitalization as of November 30 last year.
While above 95% of foreign portfolio investments were made in 18 sectors, five of these sectors attracted more than 60% of their total investment, amounting to Tk 227,642 million during the period, according to a research by LankaBangla Finance Ltd.
Other sectors that appealed to foreign investors are: Telecommunications, Non-Bank Financial Institutions, Engineering, Textile, Fuel & Power, Cement, IT, General Insurance, Travel & Leisure, Mutual Funds, Tanneries, Life Insurance, Services and Real Estate, and Ceramics.
“Foreign investors preferred these select sectors as their corporate governance is good, earnings per share (EPS) attractive, and their business outlooks bright,” DSE Managing Director KAM Majedur Rahman told the Dhaka Tribune.
He said portfolio investments in the stock market would increase this year as no political uncertainty exists now after the just concluded inclusive national elections.
Focusing on company specific investment, the research said foreigners invested the most in DBH followed by Olympic, BRAC Bank, BX Pharma, Islami Bank, Renata, BSRM, Square Pharmaceuticals, BATBC, IDLC, and AB Bank.
The study found that the most lucrative sector for foreign investment in Bangladesh capital markets for the last year (up to November) was the Food & Allied sector. Foreign investors invested 16.18% of the sector's total market capitalization in the shares of listed companies in the food and allied sector.
They invested 13.91% of the pharmaceuticals sector’s market capitalization followed by banks with 9.22%, non-banking financial institutions 5.98%, and 3.59% in the fuel and power sector, the study added.
Focusing on company specific data, the study said foreign investments in Olympic were the highest during the given period, as they invested 41.13% of the total market capitalization of the company, followed by BRAC Bank, DBH, BX Pharma, Renata, and Square Pharmaceuticals.
The listed pharmaceutical and chemicals sector of Dhaka Stock Exchange (DSE) companies are: ACI Limited, ACI Formulations, The ACME Laboratories, Active Fine Chemicals, Advent Pharma, AFC Agro Biotech, Ambee Pharmaceuticals, Beacon Pharmaceuticals, Beximco Pharmaceuticals, Beximco Synthetics, Central Pharmaceuticals, Far Chemical Industries, Global Heavy Chemicals, GlaxoSmithKline (GSK) Bangladesh, the IBN SINA Pharmaceutical Industry, Indo-Bangla Pharmaceuticals, Imam Button Industries, JMI Syringes & Medical Devices, Keya Cosmetics, Kohinoor Chemicals, Libra Infusions, Marico Bangladesh, Orion Infusion, Orion Pharma, Pharma Aids, Reckitt Benckiser(Bd.), Renata Ltd, Salvo Chemical Industry, Silva Pharmaceuticals, Square Pharmaceuticals, and Wata Chemicals Limited.
According to the LankaBangla study, during most of 2018 the Bangladesh capital market experienced the lowest foreign turnover in the last three years. Total foreign turnover stood at $1,076.42 million as of November 30, 2018, registering a 13.75% fall year-on-year.
The lower turnover was due to declining foreign purchases and higher foreign sell-offs, resulting in 29.66% less net purchases year-on-year.
Experts said foreign investment in the country’s premier bourse remained positive for only three months (January, March and September) of the outgoing year as overseas investors faced a number of issues, including political uncertainties in an election year, depreciation of the Taka against the US dollar, and woes in the country’s banking sector.
“The market was slow in 2018 as it was an election year. The speed with which it was supposed to recover was not achieved. The country’s capital market has been able to stay at a level that has not experienced any crisis in the market," said DSE Managing Director KAM Majedur Rahman.
To increase international acceptability of the DSE, Dhaka Stock Exchange Brokers Association (DBA) President Shakil Rizvi told the Dhaka Tribune, “We will try to bring investment from a variety of foreign organizations. Many Chinese fund managers are positive about Bangladesh's overall economy and capital market.”