Foreign funds in DSE slump further in Nov

FE Report | Published: December 06, 2018 10:55:06 | Updated: December 06, 2018 17:30:46

The net foreign funds in the Dhaka Stock Exchange (DSE) remained negative in November as foreign investors were reluctant to put fresh stakes.

Market insiders said depreciation of taka against the US dollar coupled with political tension surrounding national elections played a crucial role in withdrawing funds by the foreign portfolio investors.

In November, the overseas investors collected shares worth Tk 3.24 billion but sold shares worth Tk 3.46 billion, resulting in their net position negative by Tk 0.22 billion, according to statistics available with the DSE.

In October, the foreign investors' net position was also negative (Tk 2.01 billion), as they purchased shares worth Tk 2.83 billion and sold shares almost double worth Tk 4.84 billion, the DSE data shows.

During the year under review, the net foreign investment in stocks was also negative in February, April, May, June, July and October.

In the eleven months from January to November in 2018, the overseas investors bought shares worth Tk 42.48 billion and sold stocks worth Tk 47.40 billion, taking their net position in the negative Tk 4.92 billion.

A local stockbroker, who deals with foreign investors, said foreigners were mostly cautious as this is the elections year while depreciation of the taka against the US dollar prompted them to sell-offs.

A year earlier, the net investment by foreigners was Tk 16.42 billion for January-November period, as they brought shares worth Tk 59.82 billion and sold shares of Tk 43.40 billion, the DSE data shows.

Khiarul Bashar Abu Taher Mohammed, chief executive officer of MTB Capital, said foreigners were mostly on selling mood anticipating political turmoil ahead of elections coupled with depreciation of taka against the US dollar.

Mr Bashar, also secretary general of Bangladesh Merchant Bankers Association (BMBA), however, said, foreign investment will pick-up again if the political environment remains calm after the elections.

Between January 01 and November 29, 2018, DSEX, the prime index of the DSE, also eroded 963 points or 15.42 per cent.

Also known as portfolio investment, foreign investment accounts for less than 2.0 per cent of the premier bourse's total market capitalisation, which stood at Tk 3,841 billion at the close of trade on Wednesday.

The foreign investors' preferred sectors were banking, non-bank financial institutions, power and energy, pharmaceuticals, telecoms and IT, said a local stockbroker.

Foreign investors also focus on some multinational companies those announce healthy dividends and generate good profits, he added.

In 2017, the overseas investors bought shares worth Tk 65.76 billion while they sold stocks worth Tk 48.71 billion to take their net investment to Tk 17.05 billion, the DSE data shows.


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