Foreign investment in the capital market of Bangladesh continued to fall for the fifth month in a row in August.
Analysts said the depreciation of the taka coupled with political uncertainty ahead of the 11th general election had shaken the confidence of investors, leading to the decline.
According to the Dhaka Stock Exchange (DSE), foreign investors sold shares worth Tk181.76 crore against purchases of Tk176.01 crore in August, amounting to net investment of negative Tk5.75 crore in the month.
Earlier in July, foreign investors sold shares worth Tk444.74 crore against purchases of Tk412.04 crore, amounting to net investment of negative Tk32.7 crore.
Net foreign investment was also negative in April, May and June.
In April, net foreign investment amounted to negative Tk29.69 crore, while the figure was negative Tk282.32 crore in May, and negative 206.68 crore in June.
Dhaka Stock Exchange Brokers Association (DBA) President Mostaq Ahmed Sadeque said the depreciation of the taka against the US dollar had dampened the mood of foreign investors, as it decreased their profitability.
Furthermore, political uncertainty ahead of the upcoming national election had also made them adopt a “wait and see approach,” he added.
Another capital market expert said the foreign investment portfolio plays a vital role in any capital market.
Capital market operators said a string of banking scandals along with lack of good governance in the capital market also discouraged investment.
The liquidity crisis at the country’s banks had made foreign investors wary of investing in Bangladesh’s capital market, they added.
AFC Capital Limited CEO and Bangladesh Merchant Bankers Association (BMBA) Executive Committee member Mahbub H Mazumder said: “They (foreign investors) are observing political developments centring on the next parliamentary election, irregularities in the financial sector, and the depreciation issue.”
