Political tension hits much-preferred multinational stocks

Listed foreign companies passed another tough year, with their stocks suffering further erosion in market value due to investors' apathy in making fresh investments.

A major reason is the exodus of foreign investors from Bangladesh's secondary market.

Overseas investors mostly prefer multinational companies when they decide to enter Bangladesh's equity market, according to market operators.

These companies are well governed, have strong fundamentals and produce quality products. Still, data from the Dhaka Stock Exchange (DSE) shows that foreign investors have been shunning these companies in what market experts say is to stay away from the market itself.

That has impacted the performance of the stocks.

"Multinational companies are the first choice of foreign investors. However, overseas investors felt discouraged to increase their exposure due to persistent political uncertainties and squeezed profitability," said Mir Ariful Islam, managing director & CEO of Sandhani Asset Management.

The stocks endured significant erosion when foreign investors pulled out money from Bangladesh's equity market because local investors could not absorb the sale pressure, Islam explained.

The erosion of foreign investments in stocks continued in November this year; shares worth Tk 940 million were purchased while there were sell-offs of Tk 1.73 billion. Due to the massive sell-offs, shares of all multinational companies but Marico Bangladesh plunged.

BAT Bangladesh, the second largest stock in terms of market cap, experienced the highest correction of 32 per cent to Tk 248.9 per share among listed foreign stocks between December 31 last year and December 29, 2025.

Simultaneously, foreign stake in the company shrank from 4.50 per cent in January to 3.3 per cent in November this year.

Grameenphone, the largest stock in terms of market capitalization, experienced a similar trend. Its stock lost 20 per cent in market value while foreign stake declined to 0.87 per cent in November this year from 1 per cent in December last year.

The overall market cap of listed multinational companies plummeted 16 per cent in the year to Monday to Tk 949 billion.

Only Marico Bangladesh's stock surged 16 per cent to Tk 2,651.2 each share on the Dhaka Stock Exchange during the period and its market cap soared by Tk 12 billion in the year. Consistent financial performance and record dividend declaration inspired local and foreign investors to put funds in Marico.

Marico's annual profit jumped 28 per cent year-on-year to Tk 5.91 billion in the year ended in March this year. It paid a total 3,840 per cent cash dividends for the year to March this year and 1,100 per cent interim cash dividends for the six months to September this year.

Akramul Alam, head of research at Royal Capital, said persistent political and macroeconomic challenges discouraged overseas investors from making fresh investments in stocks.

"The broader economic activities remained sluggish amid political uncertainties, and the profitability of major companies remained subdued for high input costs," Alam said.

As a result, most foreign companies saw their profits erode in the nine months through September this year, compared to the same period last year.

Combined profits of listed multinational companies plunged 28 per cent year-on-year to Tk 45 billion, while revenue dropped 2.54 per cent to Tk 346 billion in January-September this year.

Private sector credit growth fell to a historic low of 6.23 per cent in October this year, reflecting

waning business confidence and tighter lending conditions,

Alam said.

The high value of the dollar against the local currency remained another major concern. Although the foreign exchange market has stabilized in recent months due to higher dollar inflows, supported by strong remittance and export earnings, the taka-dollar exchange rate remains as high as before.

"When the local currency gets cheaper, foreign investors incur losses as the value of their assets falls even when share prices remain unchanged," Alam said.

He also noted that many global fund managers have rebalanced their portfolios, while some have shifted to gold to secure investments instead of investing in equities.

Other factors, Mr Alam added, include a confidence crisis, elevated banking sector vulnerabilities, and record non-performing loans exposed in the banking sector after the political changeover.

Salim Afzal Shawon, head of research at BRAC EPL Stockbrokerage, said some of the overseas investors had realized gains due to companies' poor financial performance, which intensified share sell-offs.

Foreign investors want a stable, predictable and long-term policy environment, with particular emphasis on continuity under an elected government. They need assurance that their capital is safe over the long term and will generate returns.

However, Mr Shawon said, foreign investors are closely watching Bangladesh and making queries. "Portfolio investment is expected to pick up again if the political environment remains calm after the national election."

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