The net foreign investment at Dhaka Stock Exchange remained negative for the last 11 months in January this year due mainly to low investors’ confidence in the market, gloomy economic reports and volatile financial sector.
The net foreign investment dipped to Tk 128 crore negative in January this year after Tk 16.2 crore negative in December last year.
In January, the overseas investors sold shares worth Tk 402 crore against their purchase of shares worth Tk 274 crore.
The foreign investors withdrew Tk 1,114 crore in the last 11 months.
In the last 25 months, the foreign investors were the net sellers in 20 months that indicated highly negative sentiment of the foreign investors over the market, market experts said.
They said that the intensity of foreign fund withdrawal was more acute than that was in 2010-2011, the year of market debacle.
The foreign investors continued pulling funds out the market amid concerns over the country’s economy, volatility in the financial sector and anomalies in the capital market.
The financial sector has been plagued by the increased non-performing loans, various irregularities, scams and pressure on exchange rate.
A decline in the private sector credit growth to a nine-year low, negative export earnings for last five months, poor tax revenue collection and heavy government borrowing were adding woes to the waning investors’ confidence.
Market experts said that fabrication of financial documents by listed companies, widespread irregularities, asymmetric regulatory approach and approval of weak initial public offerings had made investors lose confidence in the market.
The regulators failed to revive the investors’ confidence in the market.
The foreign investors were also spooked by a prolonged bitter tussle between Grameenphone and telecom regulator Bangladesh Telecommunication Regulatory Commission over an audit claim, market operators said.
Despite various initiatives from the government, the capital market remained volatile in January with choppy trading.
The continued foreign investment flight in last two years from the capital market has become a heavy drag on the market.
In 2019, the overseas investors sold shares worth Tk 4,166.81 crore against their purchase of shares worth Tk 3,678.64 crore.
In the last 24 months, the overseas investment was positive in two months — January and February — in 2019 and three months — January, March and September — in the previous year.