Net foreign investment in the Dhaka Stock Exchange (DSE) remained negative for the two straight months in April as overseas investors continued their selling binge.
Foreign investors collected shares worth Tk 2.57 billion but sold Tk 4.11 billion worth of shares last month, resulting in their net position of a negative Tk 1.54 billion, according to statistics available with the DSE.
In March, the overseas investors' net position was also negative Tk 1.23 billion, as they purchased shares worth Tk 3.75 billion and sold shares worth Tk 4.98 billion, the DSE data shows.
Market analysts said the foreign investors sold shares in line with the local investors amid lack of confidence and dearth of quality stocks.
Foreign investors look for companies that performed well, maintain good governance and have growth potential. "But we were not provide to them with a long list of such companies," said a merchant banker, preferring anonymity.
He noted that researchers can recommend names of only 30 to 35 companies, out of more than 300 listed, to meet foreign investors' criteria.
AB Mirza Azizul Islam, former finance adviser to the caretaker government suggested to bring quality stocks to attract foreign investors as well as increased depth of the market.
A local stockbroker, who deals with foreign investors, said depreciation of local currency against the US dollar was another reason for withdrawal of funds by the foreign investors.
However, he said, the foreign investors are not the market drivers of the country's capital market as foreign investment makes up less than 2.0 per cent of DSE's total market cap and is the lowest among South Asian countries.
Stock indices also took a big hit in April. DSEX, the benchmark index of the premier bourse, fell 289 points or 5.26 per cent during the month to settle at 5,202.
In 2018, net foreign funds in stocks were in the negative Tk 5.93 billion as nine months out of 12 were in the negative territory. The overseas investors bought shares worth Tk 44.96 billion and sold shares worth Tk 50.89 billion in 2018.
Banks and financial institutions shares were the top choice of foreign investors, who also seemed interested in power and energy, telecom, pharmaceuticals, multinational companies and IT companies.
Delta Brac Housing Finance has the highest foreign investors' stake with - 42.86 per cent, followed by Brac Bank 42.70 per cent and Olympic Industries 39.84 per cent as of March 31, 2019, the DSE data shows.
Also known as portfolio investment, foreign investment accounts for less than 2.0 per cent of the premier bourse's total market capitalisation, which stood at Tk 4,132 billion as of Monday.
