Foreign funds in DSE scale new height

The Dhaka stockmarket is on course to receive its highest flow of foreign investment this year, as the inflows in the first 11 months have already surpassed previous records.

Net investment between January and November stood at Tk 2,388.09 crore, which is almost 23 percent higher than the last year's total.

A comparatively better political situation, positive market outlook and favourable macroeconomic indicators have encouraged foreign investors to inject money into local securities, said stockbrokers who deal with portfolio investments.

Aggressive overseas marketing by local stockbrokers and the government's foreign policy towards Southeast Asian countries also attracted overseas investors to the Dhaka stockmarket.

The market value of fundamentally strong shares was very lucrative to foreign investors, whose focus was mainly toward consumer-driven securities, said Md Saifuddin, managing director of IDLC Securities.

Though there was a political instability in the first quarter of the year, the situation started easing from the second quarter onwards, he said.

Other than the political calm, economic indicators such as exports and remittance are maintaining a steady growth, he said.

The country's efforts to strengthen regional relationship especially with the Southeast Asian nations are also lending added confidence to the foreign investors, he added.

The managers include world renowned fund managers like Morgan Stanley, JPMorgan, 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 the country's capital market through these funds.

Faruq Ahmad Siddiqi, a market expert and a former chairman of the Bangladesh Securities and Exchange Commission, said it will be good for the market if the investment is made with a long-term outlook.

“Short-term investment by them may increase the risks in the market,” he said, while calling for foreign investment to be dealt with carefully.

Also known as portfolio investment, foreign investment accounts for less than 2 percent of DSE's total market capitalisation, which was Tk 322,254 crore after the close of yesterday's trade.

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.