Net foreign investment in the Dhaka bourse has been on a downward trend for the last one year as the overseas investors continued to pull out their fund amid prolonged bearish market trend.
The foreign investors withdrew a total of Tk 12.90 billion in the past 12 consecutive months, according to statistics from the Dhaka Stock Exchange.
In line with the declining trend in 2019, net foreign funds was Tk 1.28 billion in negative and Tk 1.75 billion in January and February in 2020 respectively.
The foreign investment data of March, 2020 was not available as the stock market remained closed due to coronavirus pandemic.
In January 2020, the overseas investors bought shares worth Tk 2.74 billion while they sold stocks worth Tk 4.02 billion, taking the net position of Tk 1.28 billion in the negative, the DSE data showed.
The net foreign fund was Tk 1.75 billion in negative in February 2020, as they sold shares worth Tk 3.67 billion against purchasing of Tk 1.92 billion.
Market analysts said the foreign investors were selling off their shares due to the lack of confidence, depreciation of local currency against the US dollar and concern over the country's financial sector.
Investors confidence was affected due to some policy changes and gloomy macroeconomic outlook, said an analyst.
He noted that lack of depth of the stock market, financial market volatility, poor regulatory control, approval of weak IPOs (initial public offerings) also dented foreign investors confidence in the country's capital market.
He said foreign investors are also worried like local investors amid ongoing crisis due to the raging pandemic.
A leading broker, who deals with foreign investors, said strict decision on Grameenphone, the largest listed company of the DSE by the telecom regulator in February 2019, ultimately rattled the whole stock market.
Throughout the year, GP was embroiled in a tussle with the BTRC over the telecom regulator's audit claim of Tk 125.80 billion in unpaid taxes and dues.
Meanwhile, GP deposited a partial amount of Tk 10 billion to the BTRC in February this year.
The foreign investors were upset with the government's tough stand on GP-one of their prime choices.
Accordingly, GP declared only 130 per cent cash dividend for the year 2019. In 2018, the company disbursed 280 per cent cash dividend.
The share price of GP also saw 36.40 per cent fall in the past one year to close at Tk 238.80 on March 25, 2020.
The GP has notable impact on index movement due to its large market capitalisation which also impacted the overall market trend.
The DSE key index lost 1,522 points, wiping out market capitalisation of Tk 1,015 billion in the past 12 months since March 25, last year.
Prices of other multinational companies considered as good shares to foreign investors, also suffered losses between 7.25 per cent and 62.23 per cent in last one year until March 25.
Prices of Heidelberg Cement, BATBC, Bata Shoe and Berger Paints also plunged 62 per cent, 42 per cent, 41 per cent and 30 per cent respectively in the last one year.
Banks and financial institutions shares were the top choice of foreign investors, who also are also attracted in power and energy, telecom, pharma, multinational companies and IT companies.
Also known as portfolio investment, foreign investors have the highest stakes in the Brac Bank - 43.23 per cent, closely followed by Delta Brac Housing Finance - 41.17 per cent and Olympic Industries 40.02 per cent as of February 29, 2020, the DSE data showed.
In 2019, net foreign investment was Tk 4.88 billion in negative as the overseas investors bought shares worth Tk 36.78 billion while they sold stocks worth Tk 41.66 billion.
babulfexpress@gmail.com