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The net foreign investment at Dhaka Stock Exchange remained negative for the sixth consecutive month in August as the foreign investors kept withdrawing funds from the market due to lack of confidence in the market and instability in the country’s financial sector.
Investment by the overseas investors at the bourse was negative in 15 months out of last 20 months. It was positive only in two months (January and February) this year and three month (January, March and September) in last year.
The overseas investors withdrew around Tk 619 crore in last six months (March-August) from the capital market.
The net foreign investment dipped to Tk 102.53 crore negative in August after Tk 164 crore negative in July.
In August, the overseas investors sold shares worth Tk 279 crore against their purchase of shares worth Tk 176.78 crore.
The foreign investors continued selling shares as the country’s capital market has been going through a rough phase, causing the key index to shed 43 points in the period between July 31 and August 29 and 725 points since February this year.
Stock market experts said the foreign investors got in a muddle over the market situation amid volatile financial market and a prolonged bearish trend at the capital market.
The foreign sell-offs worsened the volatile situation at the market, they said.
Stock market expert and United International University professor Mohammad Musa told New Age that the capital market had been suffering from the investors’ low confidence and trust as investors were sceptical about market improvement.
The continued instability in the financial sector with huge amount of non-performing loans in the banks also caused huge foreign sell-offs, he said.
The volatility in the financial sector also reduced investment capacity of the institutional investors that played a key role in the continued plunge in the market, Musa said.
Market operators said that the government failed to bring down the banks’ NPLs; rather the amount of bad loans was rising.
Besides, the Grameenphone’s tussle with the Bangladesh Telecommunication and Regulatory Commission over audit claim resulted in the recent plunge in the share prices of the largest capitalised company at the market that also contributed to the non-stop fall at the market, market operators said.
The foreign investors might withdraw holdings to avoid pitfalls at the market, they said.
In July, the foreign investors sold shares worth Tk 474.03 crore and bought shares worth Tk 309.36 crore.
The net foreign investment position was Tk 105 negative in June, Tk 65 crore negative in May, Tk 154 crore negative in April and Tk 123 crore negative in March this year.
Despite some regulatory attempts to revive investors’ confidence, the market did not turn around, market operators said.
The total foreign turnover on the DSE plunged to Tk 456.09 crore in August from that of Tk 783.39 crore in the previous month.
The net foreign investment was Tk 593.47 crore negative in 2018 with nine months of decline on political uncertainties surrounding the December 30 national elections. After the elections, the foreign investors had moved to buy shares heavily in January and February with an expectation that the market would turn around.
Before 2018, the net overseas investment at the bourse was Tk 676.58 crore negative in the year of market crash (2010).
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