Foreign investment in the Dhaka Stock Exchange declined last month amid political unrest across the country.
According to Dhaka Stock Exchange data, the net foreign investment declined to Tk 90.53 crore in March from the previous month’s Tk 103.56 crore while it was Tk 99.72 crore in January.
Market operators said political instability and acts of violence shook the foreign investors’ confidence in the market.
Although the foreign investors are still buying more than they are selling, the investment volume has decreased significantly, they added.
Foreign and non-resident Bangladeshi investors bought shares worth Tk 124.31 crore and sold shares worth Tk 33.77 crore in March, according to the latest DSE data.
The data also showed that the foreign investors’ contribution to the bourse’s turnover last month was Tk 158.09 crore, which is Tk 98.21 crore or 38.13 per cent less than the previous month’s turnover of Tk 256.30 crore.
Participation of the foreign investors in the capital market increased in January and February as they had thought that the market would not decline further.
The DSE data showed that foreign investors in January bought shares worth Tk 136.48 crore and sold shares worth Tk 36.75 crore.
The foreign investors’ contribution to the turnover was Tk 173.23 crore in January while it was Tk 163.65 crore in December last year.
The old benchmark general index of the bourse, DGEN, was at 4190.99 points on January 1, but it increased to 4227.54 points on January 31.
The DGEN continued to increase further till mid-February as the participation of both retail and foreign investors on the trading floor increased.
Foreign investors in February bought shares worth Tk 179.93 crore and sold shares worth Tk 76.36 crore, which means their contribution to the month’s total turnover was Tk 256.30 crore, the highest after September 2011.
The DSE data also showed that the participation of foreign investors in the stock market reached to a record high in 2010 when the market was in a boom.
The foreign investors’ contribution to the total turnover rose to Tk 2,834.90 crore in 2010 from 2009’s Tk 1,438.38 crore.
However, after the market crash in December 2010, it declined to Tk 2355.23 crore in 2011, which further went down to as low as Tk 1,904.19 crore in 2012.
Bangladesh Securities and Exchange Commission on December 27 last year formed a two-member committee to raise the foreign portfolio investment in the capital market.
The BSEC committee suggested that the capital market should introduce diversified market products according to the need of the foreign investors, including ensuring a vibrant bond market and introducing SME market, Islamic market and derivative market.
As per the recommendations of the committee, the BSEC decided to sit with the stakeholders to discuss the suggestions with a view to increasing the foreign investors’ participation in the capital market.
The DSE also launched a market index of international standard, which was also a coordinated move to this end.
-With New Age input
