Net foreign investment in the Dhaka bourse has been on a downward trend for the last 14 straight months as the overseas investors continued to pull out their fund amid prolonged bearish market trend.
The foreign investors withdrew a total of Tk 17.53 billion in the past 14 consecutive months since March 2019, according to statistics from the Dhaka Stock Exchange.
In the first half (H1) of 2020, net foreign investment in prime bourse was Tk 7.66 billion in negative although trading on the bourses remained closed for two months due to government holidays to curb the spread of deadly virus Covid-19.
Trading and settlement activities on the bourses remained suspended from March 26 to May 30, the longest closure since the Libration War, officials said.
In January-June, 2020, the overseas investors bought shares worth Tk 27.94 billion while they sold Tk 35.60 billion worth of shares, taking the net position of Tk 7.66 billion in the negative, the DSE data showed.
The foreign investors had been suffering a crisis of confidence for long while Covid-19 outbreak added to their worry, said an analyst.
He noted that the regulator-set floor price system halted massive sell-pressure from the foreign investors.
The stock market regulator set the floor price on March 19 for all stocks on the basis average price of last five days to stop the market fall amid the coronavirus pandemic.
He noted that the financial market volatility, poor regulatory control, approval of weak IPOs (initial public offerings) also dented foreign investors confidence in the country's capital market.
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 amid ongoing pandemic.
Foreign investors confidence was also affected due to some policy changes and gloomy macroeconomic outlook, said a merchant banker.
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 by market-cap, by the telecom regulator in February 2019, ultimately rattled the whole stock market.
Since February 2019, 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, the stockbroker said.
The share price of GP also saw more than 40 per cent fall since February 2019 to close at Tk 241.90 on Thursday.
The GP has notable impact on index movement due to its large market capitalisation which also impacted the overall market trend.
Prices of other multinational companies considered as good shares to foreign investors, also suffered losses during the period under review.
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 negative Tk 4.88 billion as they bought shares worth Tk 36.78 billion while they sold stocks worth Tk 41.66 billion.
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