Norway’s sovereign wealth fund (SWF), the world’s biggest fund, raised stakes in the Bangladesh’s capital market for the fourth consecutive year in 2019 despite the fact that the market remained bearish for the second year amid irregularities in the country’s banking sector and capital market.
Grameenphone’s prolonged tussle with the Bangladesh Telecommunication Regulatory Commission over a BTRC audit claim also impacted the market negatively.
The government pension fund of Norway has footprints in 22 companies in 2019 against 20 companies in the previous year.
The foreign fund increased its ownership in seven companies, kept unchanged its holdings in five companies and lowered in six firms in 2019 compared with that in the previous year, according to the data of Norges Bank Investment Management Company which manages the SWF.
The fund ditched ownership in two companies while invested in four new entities in the country’s capital market in the year.
The SWF has been increasing its stake in the Bangladesh stock market every year since its start of investment in the country in 2015 with around $19 million.
The fund is now one of the world’s largest funds with its holdings in around 9,000 companies in 74 countries. The fund invests in shares, bonds and real estate all around the world.
When the Bangladesh capital market has been in the doldrums for the last two years, the Norway’s government fund enhanced its presence in market keeping in mind huge potential of the country’s stock market, market operators said.
The SWF did not to withdraw funds from the otherwise dull market where the other foreign investors continued pulling funds out of the market.
In the last 25 months, the net foreign investment at the DSE was negative for 20 months.
Market operators said that the country’s capital market remained at the bottom despite economic growth, and the government had no option but enrich its capital market to finance its various projects to achieve its 2021 and 2030 visions.
They said banks could not finance the huge amount of money needed for investment and the capital market would be the main source of funds for the development.
Therefore, the foreign fund found it profitable for more long-term investments in the capital market of Bangladesh in 2019 despite the market passing a very tough year, they said.
DSEX, the key index of the DSE, shed 17.31 per cent, or 932.71 points, over the year to close at 4,452.93 points on December 30, 2019 after it had lost 858.88 points in the previous year.
The net investment value of the SWF in Bangladesh capital market declined to $188.12 million in 2019 compared with that of $202.91 million in the previous year due mainly to the significant fall in share prices of most of the companies. The value was $244.41 million in 2017.
The SWF almost doubled its holdings in Summit Power to 2.36 per cent in 2019 compared with that of 1.61 per cent in the previous year.
It also expanded ownership in Grameenphone, Bangladesh Submarine Cable Company, Prime Bank, Beximco Pharmaceuticals and BBS Cables in 2019.
The foreign fund withdrew its entire investment in ACME Laboratories and Bashundhara Paper Mills to invest in Delta Brac Housing Finance Corporation, IPDC Finance, Renata and Esquire Knit Composite for the first time.
The fund cut investments in Southeast Bank, Berger Paints, Mercantile Bank and Olympic Industries for the second year.
The SWF invested most in Square Pharmaceuticals ($39.33 million) followed by Grameenphone ($35.75 million), BRAC Bank ($24.87 million) and Beximco Pharmaceuticals ($9.94 million).
The foreign fund kept its ownership unchanged in IDLC Finance (3 per cent), BRAC Bank (3 per cent), Singer Bangladesh (3 per cent), City Bank (2.95 per cent), and Eastern Bank (2.64 per cent).
The fund made a 19.9-per cent return on global investments in 2019, earning a record $180 billion.