Net foreign investment in the Dhaka stockmarket slumped 14.22 percent year-on-year in October as investors remained cautious.
Foreign investors bought shares worth Tk 302.88 crore and sold shares worth Tk 107.02 crore to take net investment to Tk 195.86 crore last month, according to data from the Dhaka Stock Exchange.
Stock indices and turnover rose last month, leading some foreign investors to offload a portion of shares from their portfolio to book profit.
DSEX, the benchmark index of the premier bourse, increased almost 2 percent to 5,173 points last month.
Daily average turnover on the DSE jumped 186 percent to Tk 750 crore in October from the same period last year.
“It is not possible to evaluate the foreign investment trend with one or two months’ statistics, as they are long-term investors,” said a leading stockbroker who deals with foreign investment.
Foreign investors usually remain on the sidelines when the market rises, he said, adding that their go-slow approach may be a reason behind last month’s decline in net position.
However, overseas investors still interested in the Bangladesh market with the country’s favourable economic factors, political stability and a positive market outlook, the stockbroker said.
The foreign investors are mostly fund managers like Morgan Stanley, JP Morgan, Goldman Sachs and BlackRock.
They managed various types of funds like endowment funds, hedge funds, long-only funds and mutual funds, and they invest in the Bangladesh market through these funds.
Last month’s net investment amount was 1.5 percent of a total turnover of Tk 12,765 crore on the premier bourse.
Also known as portfolio investment, foreign investments account for around 1 percent of DSE’s total market capitalisation of Tk 341,003 crore as of yesterday.
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.
In January-October, foreign investors bought shares worth Tk 3,871.34 crore and sold shares worth Tk 1,597.39 crore to yield a net investment of Tk 2,273.95 crore, according to DSE data.