In 2017-18, the net foreign investment was Tk71.76 crore positive
Net foreign investment in Dhaka Stock Exchange (DSE) fell to negative Tk183.70 crore in the just concluded fiscal year(FY), lowest in eight years since 2011-12 FY.
In 2017-18, the net foreign investment was Tk71.76 crore positive, according to data from the premier bourse.
The FY19 figure was the lowest since the market crash in FY 2010-11 when the net foreign investment was Tk 404.59 crore negative.
According to the DSE data, foreigners bought shares worth Tk4,017.81 crore against their share sales of Tk4,201.51 crore last year (FY19).
In 2017-18, overseas investors had bought shares worth Tk5,900.47crore against their share sales of Tk5,828.70 crore.
Stock stakeholders said that the foreign investors, muddled by the continuous falling trend in the market and haphazard environment in the financial market, kept selling shares amid volatility at the market.
Market experts have said the market began to dip sharply from beginning of the year, losing about 500 points which descended more as the year went by.
They say the investors went through a volatile financial sector amid financial scams, non-performing loans, and poor management that dampened investors' moods.
Meanwhile, political uncertainties before and after the national elections and depreciation of the Taka against the US dollar-are reason for negative foreign investment.
Capital market operators also say a series of banking scandals, along with lack of good governance in the capital market, also discouraged investment.
The liquidity crisis in the country’s banks has also made foreign investors wary of investing in Bangladesh’s capital market, they add.
Dhaka Stock Exchange Brokers Association (DBA) President Shakil Rizvi says: “The depreciation of the taka against the US dollar dampened the mood of foreign investors in the whole of last financial year, as it decreased their profitability.”
To increase international acceptability of DSE, Shakil Rizvi also has said: “We will try to help them to bring investment from different foreign organizations. Many Chinese fund managers are positive about Bangladesh's overall economy and capital market.”
The net investment by the foreign investors at the country’s premier bourse was an all-time high at Tk2,493.57 crore in the FY 2013-14. Overseas investors’ turnover at the bourse was negative Tk52.06 crore in FY10, negative Tk404.59 crore in FY11, Tk529 crore in FY12, Tk1,230.92 crore in FY13, Tk 2,493.57 crore in FY14 and Tk 1,299.84 crore in FY15 and Tk 2,268.47 crore in FY17.
Managing director of IDLC Investments Limited Md Moniruzzaman says FY2017 was a good year for market. Both local and foreign investors poured in their money. But FY2018 was not a good year for banking sector, he adds.
“Investors also waited in the sideline before 2018 election,” he further says.
He also has said that in 2019 some investors might still be waiting for currency depreciation before increasing their market investment in Bangladesh. Some blue chips also have shaken their confidence while some others have gone up in valuation, he adds.
Professor of United International University and stock market analyst Dr Mohammad Musa says volatility in the country’s financial sector also kept the investors on edge from the beginning of the year.
Experts on the capital market said foreign investment portfolio played a vital role in any capital market.
DSE Managing Director KAM Majedur Rahman has said that the market was slow in 2018 as it was an election year. The speed with which it was supposed to recover was not achieved, he adds.