Dhaka, Bangladesh (BBN) – Net foreign investment in Bangladesh’s stockmarket soared 856 percent year-on-year in first 10 months in 2016 as foreign fund managers considered the market lucrative for long-term investment.
Analysts said the favourable macroeconomic indicators coupled with easing of political tension in recent months increased the foreign investors’ confidence to pour fresh fund into stocks.
Net investment by foreign investors for January to October, 2016 stood at BDT 8.50 billion, which was BDT 837 million in the same period of 2015, jumping 856 percent over the period, according to statistics available with the Dhaka Stock Exchange (DSE).
The overseas investors bought shares worth BDT 39.67 billion, while they sold stocks of BDT 31.17 billion in the 10 months of 2016, the DSE data showed.
In 2015 for January to October, the foreign investors bought shares worth BDT 31.07 billon, while they sold shares worth BDT 30.23 billion, taking the net position at BDT 837 million.
“Foreign investment in our stockmarket is gradually increasing and the trend will continue in the coming days too as the market offers discounted rate of many fundamental stocks,” said a DSE official.
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.
“The foreign investors are seeing the Bangladesh outlook very positively,” said an analyst adding that favourable macroeconomic indicators, rising income and consumption of young demography and easing political tension have increased investor confidence”.
Banks shares were the top choice of foreign investors, who also seemed interested in power and energy, non-banking financial institutions, telecom, pharmaceuticals, multinational companies and IT.
Foreign investors include global investment banks like Morgan Stanley, JPMorgan, Goldman Sachs and BlackRock.
Net foreign investment in 2015 was BDT 1.86 billion, a 93 percent increase over 2014, according to DSE data.
Also known as portfolio investment, foreign investment accounts for less than 2.0 percent of the premier bourse’s total market capitalisation, which stood at BDT 3,240.109 billion as on Tuesday.