• Monday, Dec 09, 2019
  • Last Update : 02:58 am

Net foreign investment at DSE continues to fall for 8 months

  • Published at 11:23 pm November 3rd, 2019
dhaka stock market DSE
File photo of Dhaka Stock Exchange Limited Dhaka Tribune

According to the DSE data, in October, the foreign investors sold shares worth Tk328.92 crore against their purchase of shares worth Tk231.99 crore

The net foreign investment at primer bourse Dhaka Stock Exchange (DSE) fell for the eight consecutive month in October as the foreign investors went for large scale sale of shares due to protracted confidence crisis in the market.

According to the DSE data, in October, the foreign investors sold shares worth Tk328.92 crore against their purchase of shares worth Tk231.99 crore.

The net foreign investment dipped to Tk96.93 crore negative in October after Tk61 crore negative in September. It was Tk102 crore negative in August.

The foreign investors withdrew around Tk776 crore in the last eight months from the capital market.

Market insiders and analysts have said that the volatility in the financial sector as well as in the capital market many be a major reason for the share sales in September. The volatility in the capital market began at the end of January and it did not improve since. 

Depreciation of taka against the US dollar may have dampened the mood of foreign investors in the last few months, as it decreased their profitability, market operators say further.

In September, the foreign investors sold shares worth Tk318 crore against their purchase of shares worth Tk257 crore. In August, they bought shares worth Tk176 crore against their sales worth Tk279 crore.

In July, they bought shares worth Tk309 crore against their sales worth Tk474 crore. In June, the foreign investors sold shares worth Tk305.46 crore and bought shares worth Tk294.94 crore.

The net foreign investment position was Tk65 crore negative in May, Tk154 crore negative in April and Tk123 crore negative in March.

Stock market analyst and honorary professor at Dhaka University’s economics department Abu Ahmed has told Dhaka Tribune that most of the listed companies are suffering from lack of good governance and companies’ sponsor directors often trade shares anonymously, violating securities laws.

“They tend to make false financial reports. In this case, foreign investors will not invest in capital market,” he said.

“Soaring non-performing loans coupled with falling foreign portfolio investment triggered further sell-offs,” he explained. 

Professor of United International University and stock market analyst Mohammad Musa said that the continued instability in the financial sector with huge amount of non-performing loans in the banks also caused huge foreign sale. 

“The stock market had been suffering from the investors poor confidence,” he added.

Experts on the capital market said foreign investment portfolio played a vital role in any capital market.

Meanwhile, the market capitalization at DSE dropped about Tk65,500 crore in the last nine months. The prime index, DSEX, lost 1,250 points from its highest hit of 5,950 points, since January 24 this year.