Net foreign fund in stocks negative for fifth month

The net foreign fund in the Dhaka Stock Exchange (DSE) continued to remain negative for five consecutive months till August as the foreign investors were reluctant to put fresh stakes.

Market insiders said that fears over political uncertainty ahead of national election coupled with depreciation of the taka against the US dollar contributed to the sell-offs by the foreign investors.

In August, the overseas investors collected shares worth Tk 1.76 billion, but sold shares worth Tk 1.82 billion, resulting in their net position negative by Tk 57 million, according to statistics available with the DSE.

In July, the foreign investors' net position was negative Tk 327 million as they purchased shares worth Tk 4.12 billion and sold shares worth Tk 4.44 billion, the DSE data shows.

The net foreign investment in stocks was also negative in February, April, May, June and July this year.

In eight months from January to August, the foreign investors bought shares worth Tk 36.97 billion and sold stocks worth Tk 33.94 billion, taking their net position negative Tk 3.03 billion.

Khiarul Bashar Abu Taher Mohammed, chief executive officer of MTB Capital, said the foreign investors continued to withdraw their funds due to the depreciation of taka against the US dollar.

He said the depreciation of local currency has made the foreign investors concerned about injecting fresh fund in stocks as it eroded their profitability.

Mr Bashar, also secretary general of Bangladesh Merchant Bankers Association (BMBA), said that fears of political uncertainty also prompted the foreign investors to go for sell-offs.

He noted that the overseas investors are pulling out their funds not only from Bangladesh but also from other frontier markets as the US dollar is getting stronger against other currencies.

DSEX, the prime index of the DSE, however, added about 298 points or 5.62 per cent in August riding on bank and non-bank financial institutions stocks.

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

They 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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