Net foreign investment in Dhaka Stock Exchange (DSE) fell to negative Tk 1.83 billion in the just concluded 2018-19 fiscal, hitting an eight-year low since 2011-12.
In 2017-18, the net foreign investment was Tk 717.60 million positive, according to figure by the country’s prime bourse.
The FY19 figure was the lowest since the market crash in FY 2010-11 when the net foreign investment was Tk 4.04 billion negative.
According to the DSE data, foreigners bought shares worth Tk 40.17billion against their share sales of Tk 42.01 billion in the last fiscal (FY19).
In 2017-18, overseas investors had bought shares worth Tk 59 billion against their share sales of Tk58.28 billion.
Market participators say foreign investors, muddled by the continuous bearish market and haphazard environment in the financial sector, kept selling shares amid volatility at the market.
Stock began to dip sharply from beginning of the year, losing about 500 points which descended more as the year went by.
Investors went through a volatile financial sector amid financial scams, non-performing loans, and poor management that dampened investors' moods, according to market analysts.
Meanwhile, political uncertainties before and after the national elections and depreciation of the Taka against the US dollar also contributed to the negative foreign investment.
Market operators also say a series of banking scandals, along with lack of good governance in the capital market, also discouraged investment.
The liquidity crisis in the country’s banks has also made foreign investors wary of investing in Bangladesh’s capital market, according to them.
“The depreciation of the taka against the dollar dampened the mood of foreign investors in the whole of last financial year, as it decreased their profitability,” said Dhaka Stock Exchange Brokers Association (DBA) President Shakil Rizvi.
To increase international acceptability of DSE, Rizvi said: “We will try to help them to bring investment from different foreign organizations. Many Chinese fund managers are positive about Bangladesh's overall economy and capital market.”
The net investment by the foreign investors at the country’s premier bourse was an all-time high at Tk 24.94 billion in the 2013-14 fiscal.
Overseas investors’ turnover at the bourse was negative Tk 520.6 million in FY10, negative Tk 4.04billion in FY11, Tk 5.29 billion in FY12, Tk 12.30 billion in FY13, Tk 24.93 billion in FY14 and Tk 12.99 billion in FY15 and Tk 22.68 billion in FY17.
Managing director of IDLC Investments Limited Md Moniruzzaman says FY17 was a good year for market. Both local and foreign investors poured in their money. But FY18 was not a good year for banking sector, he adds.
“Investors also waited in the sideline before 2018 election,” he further says.
He also has said that in 2019 some investors might still be waiting for currency depreciation before increasing their market investment in Bangladesh. Some blue chips also have shaken their confidence while some others have gone up in valuation, he adds.
Professor of United International University and stock market analyst Dr Mohammad Musa says volatility in the country’s financial sector also kept the investors on edge from the beginning of the year.
Experts on the capital market said foreign investment portfolio played a vital role in any capital market.
DSE Managing Director KAM Majedur Rahman has said that the market was slow in 2018 as it was an election year. The speed with which it was supposed to recover was not achieved, he adds.