A view of Dhaka Stock Exchange in Bangladesh

Dhaka, Bangladesh (BBN)– Net foreign investment in the Dhaka Stock Exchange (DSE) turned into negative in March after two months of positive trend, according to latest data.

The falling trend came as the foreign investors went for selling shares over caution on volatility in the banking sector and capital market, experts said.

Foreign investors purchased shares worth BDT 3.75 billion but sold BDT 4.98 billion worth of shares last month, resulting in their net position of a negative BDT 1.23 billion, the DSE data showed.

In February, the overseas investors’ net position was BDT 2.38 billion, as they purchased shares worth BDT 4.35 billion and sold shares worth BDT 1.97 billion.

The foreign investors sold shares to book profits after a significant investment in the past two months amid volatility in the foreign exchange market coupled with soaring non-performing loans in the banking sector, they explained.

They also said depreciation of local currency against the US dollar was another reason for withdrawal of funds by the foreign investors.

A local market operator, who deals with foreign investors, said the overseas investors are pulling out their fund not only from Bangladesh but also from other frontier markets due to rising trend of US dollar against local currencies.

However, he said, the foreign investors are not the market drivers of the Bangladesh’s capital market as foreign investment makes up less than 2.0 per cent of DSE’s total market cap and is the lowest among South Asian countries.

Stock indices also took a big hit in March. DSEX, the benchmark index of the premier bourse, fell 220 points or 3.85 per cent in March to settle at three months’ low at 5491.

In 2018, net foreign funds in stocks were in the negative BDT 5.93 billion as nine months out of 12 were in the negative territory.

The overseas investors bought shares worth BDT 44.96 billion and sold shares worth BDT 50.89 billion in 2018.
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 companies.

Foreign investors’ highest stake in the Delta Brac Housing Finance – more than 43 per cent, followed by Brac Bank 41.72 per cent and Olympic Industries 39.84 per cent as of February 28, 2019, the DSE said.

Also known as portfolio investment, foreign investment accounts for less than 2.0 per cent of the premier bourse’s total market capitalisation, which stood at BDT 4,132 billion as of Monday.