Welcome to Business Outlook
Related Articles
Exodus of the foreign portfolio investments from the country’s stock market has continued for the past four consecutive financial years with the foreign investors withdrawing Tk 1,760 crore in the past financial year 2021-22 amid volatility on the financial market, market manipulation, frequent policy changes and pressure on the exchange rate.
According to Dhaka Stock Exchange data, the overseas investors withdrew Tk 6,855.7 crore in the past four financial years.
The net foreign investment has become negative since the financial year 2018-19 when it was at Tk 183.7 crore negative.
It was Tk 3,513 crore in FY21 and Tk 1,399 crore in FY20. The net foreign investment became negative in FY19 for the first time after FY11.
The total foreign investments in the DSE dropped to Tk 9,700 crore, which is 2.19 per cent of the total market capitalisation of the bourse, as the foreign investors have withdrawn more than Tk 7,000 crore from the market since 2018.
The total market capitalisation on the DSE was Tk 5,17,781.7 crore as of June 30.
The total foreign holding was around 7 per cent of the DSE’s market capitalisation at the end of 2017.
In recent times, the investors have been struggling with various issues, including rising inflation, continued depreciation of the taka against the US dollar, concerns over external debts and global supply chain disruption on the account of Russia-Ukraine war.
Volatility and high risks on the market might provoke foreigners to take their funds to safe havens, market operators said.
As the United States and other countries raised their policy rates several times, the foreign investors found it lucrative to invest in those countries, they said.
The overseas investors have become net sellers since 2018 after observing volatility on the country’s financial market, interest rate ceiling on banks’ loan, introduction of floor price restriction and better trend on the developed markets.
Allegations of financial document fabrication, share price manipulation and approval of fundamentally weak initial public offerings upset the foreigners, the market operators said.
The DSEX, key index of the DSE, gained by 226.44 points to close at 6,376.94 points on June 30, 2022 from 6,150.48 on June 30, 2021.
The net investment by the foreign investors on the country’s premier bourse was at an all-time high of Tk 2,494 crore in the 2013-14 financial year.
The overseas investors’ turnover on the bourse was Tk 529 crore in FY12, Tk 1,230 crore in FY13, Tk 2,494 crore in FY14 and Tk 1,299 crore in FY15, Tk 2,268 crore in FY17 and Tk 72 crore in FY18.
(NA)
