The foreign investors at Dhaka Stock Exchange withdrew record Tk 680 crore in last seven months (March-September) from the country’s premier bourse due mainly to lack of confidence of investors in the market, widespread anomalies at the market and instability at the country’s financial sector.
The amount withdrawn in last seven months broke the previous record of withdrawal in 2009 when the foreigners had pulled Tk 440 crore out of the market in six consecutive months (January-June).
In 2010, the overseas investors withdrew Tk 676.58 crore from the market, the highest pull-out in a year.
Investment by the overseas investors at the bourse was negative in 16 months out of last 21 months. It was positive only in two months (January and February) this year and three month (January, March and September) in last year.
The net foreign investment dipped to Tk 60.35 crore negative in September after Tk 102.53 crore negative in August.
In September, the overseas investors sold shares worth Tk 318.14 crore against their purchase of shares worth Tk 257.78 crore.
The foreign investors continued pulling funds out of the DSE due mainly to prolonged bearish trend at the market, causing the key index, DSEX, to shed 148 points in the period between August 29 and September 30 and 988 points since February this year.
Market experts said that lack of confidence of investors in the market resulted in the continued share sales by the local and foreign investors.
They said that the practices of falsifying financial documents by the listed companies, widespread wrongdoings, asymmetric regulatory approach and approval of weak initial public offerings were blamed for the decline in the investors’ confidence level.
The investors, especially the foreign ones, mainly depend of the financial disclosures of the listed entities to make investment decisions, said market experts, adding that if they found that the statements were fabricated, they shied away from the market.
Former adviser to an interim government Mirza Azizul Islam told New Age that the foreign investors couldn’t gain confidence as the local investors were not showing confidence in the market.
Mirza Aziz, also a former BSEC chairman, said the continued downward trend at the market made them jittery on the trading floor.
Besides, the unpredictable rules and decisions by the regulatory bodies also irked the foreigners.
The Grameenphone’s tussle with the Bangladesh Telecommunication and Regulatory Commission over audit claim made them nervous.
The recent plunge in the share prices of the largest capitalised company at the market also contributed to the non-stop fall at the market, market operators said.
The volatility in the financial sector also reduced investment capacity of the institutional investors that played a key role in the continued plunge in the stock prices.
Market operators said that the government failed to bring down the banks’ non-performing loans and such loans were rising, which made the country’s financial sector volatile.
In August, the foreign investors sold shares worth Tk 279 crore and bought shares worth Tk 176.78 crore.
The net foreign investment position was Tk 105 crore negative in June, Tk 65 crore negative in May, Tk 154 crore negative in April and Tk 123 crore negative in March this year.
Despite some regulatory attempts to revive investors’ confidence, the market did not turn around, market operators said.
The total foreign turnover on the DSE plunged to Tk 575.93 crore in September from that of Tk 456.09 crore in the previous month.
The net foreign investment was Tk 593.47 crore negative in 2018 with nine months of decline on political uncertainties surrounding the December 30 national elections. After the elections, the foreign investors had moved to buy shares heavily in January and February with an expectation that the market would turn around.
Before 2018, the net overseas investment at the bourse was Tk 676.58 crore negative in the year of market crash (2010).
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