The net foreign investment in the Dhaka bourse plunged 84 per cent month-on-month in August last as overseas investors preferred to book profits.
Market insiders said the Dhaka Stock Exchange (DSE) indices and turnover rose last month, prompting some foreign investors to sell a portion of their shares from their portfolio to book profits.
Foreign investors bought shares worth Tk 4.32 billion (432 crore) and sold shares worth Tk 4.0 billion in August last. That left their net investment at Tk 320 million, according to DSE statistics.
In July last the net foreign investment was Tk 2.0 billion as overseas investors bought stocks worth Tk 6.25 billon and sold stocks worth Tk 4.25 billion.
"The overseas investors have bought some special stocks up to a certain level of market prices. The market prices of those kinds of shares have increased substantially. It can be a reason behind the poor turnover observed in August," said a leading stockbroker who deals with foreign investments.
He has noted that it is not possible to evaluate the foreign investment trend based on one or two months' statistics, as they are long-term investors.
Foreign investors usually remain on the sidelines, when the market rises, he said. Their go-slow approach may be a reason behind last month's decline in their net investment.
However, overseas investors are still interested in remaining involved in Bangladesh's market with the country's favourable economic factors, political stability and a positive market outlook there, he added.
In the first eight months of the current calendar year the net investment by foreign investors jumped 289 per cent compared to the corresponding period a year ago.
The net overseas investments in the January-August period of 2017 stood at Tk 17.32 billion, as foreign investors bought stocks worth Tk 45.40 billon and sold stocks worth Tk 28.08 billion.
Between January and August 2016, foreign investors bought shares worth Tk 30.51 billon and sold stocks worth Tk 26.05 billion, leaving the net investment at Tk 4.45 billion, the DSE data shows.
DSEX, the benchmark index of the premier bourse of the country, rose about 2.50 per cent to 6,006 points by the end of August last.
The daily average turnover on the DSE jumped to nearly Tk 10 billion in August last from Tk 7.50 billion the month before.
The foreign investors preferred the power and energy sector. But banks and non-bank financial institutions, pharmaceuticals, multinational companies, telecom and IT entities also caught their attention, brokers said.
Also known as portfolio investment, the foreign investment accounts for nearly 2.0 per cent of the premier bourse's total market capitalisation, which stood at Tk 4,131 billion at the close of trade on Thursday.
