Dhaka, Bangladesh (BBN)-Net foreign portfolio funds in the Dhaka Stock Exchange (DSE) jumped to a record high to BDT 26.08 billion in 2014 amid growing confidence and a positive outlook about the Bangladesh's market among the foreign investors.
Favourable economic factors, political stability and a positive market outlook encouraged foreign investors to inject money into local securities, stockbrokers who deal with portfolio investment said.
In the just concluded calendar year, foreign investors bought shares worth BDT 44.06 billion and sold shares worth BDT 17.98 billion, to take their net investment for the year to BDT 26.08 billion which is a record high, according to statistics from the DSE.
In 2013, the overseas investors bought shares worth BDT 26.52 billion and sold shares worth BDT 7.10 billion, to take their net investment for the year to BDT 19.42 billion, the DSE data showed.
Foreign fund managers see the Bangladesh stock market as one with potential among the emerging markets, said a local stockbroker who deals with foreign investors.
Bangladesh stock market is getting back its rhythm, especially this year, after three years of seeing a bearish trend since the inevitable price debacle in early 2011, they said.
The buying tendency of the foreign investors, most of whom are actually global fund managers, can also be attributed to the lower price-earnings (PE) ratio of listed companies, they added.
The overall market PE stood at 17.77 at the end of the year against 17.17 in the previous years, a level that indicates a good time for investment.
“Foreign investors are injecting fresh funds amid positive speculations, as the market is performed relatively better this year than the previous year,” he added.
He also sees the jump in net investment as an outcome of an aggressive marketing abroad by stockbrokers to bring more foreign investment into Bangladesh.
Net investment increased manifold due to growing confidence and a positive outlook about the market among the foreign investors, said Swapan Kumar Bala, managing director of the DSE.
Also known as portfolio investment, foreign investments account for less than 2 percent of DSE’s total market capitalisation of Tk 3259.24 billion as of Tuesday.
Banks were initially the foreign investors' preferred sector, but non-bank financial institutions, power and energy, pharmaceuticals, multinationals, telecoms and IT also caught their attention.
BBN/BB/AS-01Jan15-1:00pm (BST)