Net foreign investment at DSE negative last year

Foreign investment in Dhaka Stock Exchange (DSE) fell drastically in the just-concluded year,as compared to 2017.

In 2018, net foreign investment dipped to negative Tk593.47 crore, which was Tk1,704.94crore positive during 2017, according to data from the premier bourse.

Foreigners bought shares worth Tk4,496.24crore, against their share sales of Tk5,089.71 crore last year. But in 2017, overseas investors had bought shares worth Tk6,576.29crore, against their share sales of Tk4,871.34 crore.

Experts said foreign investment in the country’s premier bourse remained positive for only three months (January, March and September)of the outgoing yearas overseas investors faced a number of issues, including political uncertainties in election year, depreciation of the Taka against the US dollar, and woes in the country’s banking sector.

Experts on the capital market said foreign investment portfolio plays a vital role in any capital market.

2018 was a year of disappointment for the stock market, as the market index and turnover, including foreign investment, declined. Investors were discouraged by one issue after another, and sales pressure from foreigners worsened the scenario.

Market experts said the market began to dip sharply from May, losing 423 points in 13 consecutive days which descended more as the months went by. They said investors went through a volatile financial sector amid financial scams, non-performing loans, and poor management that dampened investors' moods.

Mahbub H Mazumder, CEO of AFC Capital Ltd and Bangladesh Merchant Bankers Association (BMBA) executive committee member, said: “They (foreign investors) observed political developments centring thejust-concluded parliamentary election, irregularities in the financial sector, and the depreciation issue.”

“The market was slow in 2018 as it was an election year. The speed with which it was supposed to recover was not achieved. The country’s capital market has been able to stay at a level that has not experienced any crisis in the market,"said DSE Managing Director KAM MajedurRahman.

Dhaka Stock Exchange Brokers Association (DBA) President ShakilRizvi told the Dhaka Tribunethat the depreciation of the Taka against the US dollar had dampened the mood of foreign investors, as it decreased their profitability. Furthermore, political uncertainty ahead of the national election had also made them adopt a “wait and see approach”.

To increase international acceptability of DSE, he also said: “We will try to help them to bring investment from different foreign organizations.Many Chinese fund managers are positive about Bangladesh's overall economy and capital market.

According to the premier bourse, the net overseas investment at DSE was Tk78.43 crore in 2011, Tk792.59 crore in 2012, Tk1,942.89 crore in 2013, Tk2,619.78 crore in 2014,Tk185.50 crore in 2015, and Tk1,340.98 crore in 2016.

Capital market operators said that a series of banking scandals,along with lack of good governance in the capital market, also discouraged investment.

The liquidity crisis in the country’s banks had also made foreign investors wary of investing in Bangladesh’s capital market, they added.

Source: https://www.dhakatribune.com

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