Net foreign investment in the Dhaka stockmarket increased 34 times to a record Tk 426 crore year-on-year in September.
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.
Aggressive overseas marketing by the local stockbrokers also attracted foreign investors to the Dhaka stockmarket.
In September, overseas investors bought shares worth Tk 589.60 crore and sold stocks worth Tk 163.35 crore, showing a 403 percent rise in net investment compared to the same period last year, according to data from the Dhaka Stock Exchange.
“A year ago, foreign investors adopted a wait-and-see approach due to political uncertainty over the national polls. But this year, the situation in the political arena is almost stable,” said Md Saifuddin, managing director of IDLC Securities.
Foreign fund managers do not see any political volatility in near future, he said.
The country's efforts to strengthen regional relationship are also giving added confidence to the investors, Saifuddin said.
“In addition, sectoral valuation suggests that investment is still lucrative in some sectors,” he said.
The foreign investors are mostly fund managers from the US and Europe, another stockbroker said.
The managers include world renowned fund managers like Morgan Stanley, JP Morgan, Goldman Sachs and BlackRock. “They managed various types of funds like endowment fund, hedge fund, long-only fund and mutual fund, and they invest in Bangladesh market through these funds.”
Last month's net investment amount was 2.41 percent of the total turnover of Tk 17,581 crore on the premier bourse.
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 DSE.
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-September, foreign investors bought shares worth Tk 3,568.46 crore and sold shares worth Tk 1,490.37 crore to yield a net investment of Tk 2,078.09 crore, according to DSE data.