Capital market: Foreign investment continues to fall for 7 months

23 Oct 2019 12:00 PM
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The net foreign investment dipped to Tk61 crore negative in September after Tk102 crore negative in August

The net foreign investment at primer bourse Dhaka Stock Exchange (DSE) fell for the seventh consecutive month in September as the foreign investors, muddled by falling trend in the market during the period, kept on their selling spree.

According to the DSE data, in September, the foreign investors sold shares worth Tk318 crore against their purchase of shares worth Tk257 crore. In August, they bought shares worth Tk176 crore against their sales worth Tk279 crore.

The net foreign investment dipped to Tk61 crore negative in September after Tk102 crore negative in August.

The foreign investors withdrew around Tk680 crore in the seven months (March-September) from the capital market.

Market operators and analysts have said that the volatility in the financial sector as well as in the capital market could be a major reason for the share sales in September. The volatility in the capital market began at the end of January and it did not improve since. 

They also think that depreciation of taka against the US dollar may have dampened the mood of foreign investors in the last few months, as it decreased their profitability.

In July, they bought shares worth Tk309 crore against their sales worth Tk474 crore.

In June, the foreign investors sold shares worth Tk305.46 crore and bought shares worth Tk294.94 crore.

The net foreign investment position was Tk65 crore negative in May, Tk154 crore negative in April and Tk123 crore negative in March.

Honorary professor at Dhaka University’s economics department Abu Ahmed has told Dhaka Tribune that most of the listed companies are suffering from lack of good governance. Companies’ sponsor directors often trade shares anonymously, violating securities laws.

“They tend to make false financial reports. In this case, foreign investors will not invest in capital market,” he said.

“Soaring non-performing loans coupled with falling foreign portfolio investment triggered further sell-offs,” he explained. 
News Source: https://www.dhakatribune.com/business/stock/2019/10/02/capital-market-foreign-investment-continues-to-fall-for-7-months