The net foreign fund in the prime bourse plunged year-on-year in ten months of the year as overseas investors are pulling out funds from the capital market fearing political jitters in the elections year.
Market operators said depreciation of taka against the US dollar coupled with political tension surrounding national elections played crucial role in withdrawing funds by the foreign portfolio investors.
In ten months from January to October in 2018, the overseas investors bought shares worth Tk 39.247 billion and sold stocks worth Tk 43.94 billion, taking their net position in the negative Tk 4.70 billion.
A year earlier, the net investment by foreigners was Tk 16.23 billion for the same period as they bought shares worth Tk 53.46 billion and sold shares of Tk 37.23 billion in January-October, 2017, the DSE data shows.
“Foreign investors went on selling spree fearing political turmoil, so they liquidated their investment ahead of elections in Bangladesh”, said a local stockbroker, who deals with foreign investors.
However, he said, foreign investment-flow will rise again if the political environment remains calm after the election.
Khairul Bashar Abu Taher Mohammed, chief executive officer of MTB Capital, said the foreign investors continued to withdraw their funds due to the depreciation of taka against the US dollar.
He said the depreciation of local currency has made the foreign investors concerned about injecting fresh fund in stocks as it eroded their profitability.
Mr Bashar, also secretary general of Bangladesh Merchant Bankers Association (BMBA), said that fears of political uncertainty also prompted the overseas investors to go for sell-offs.
Between January 1 and October 31, 2018, DSEX, the prime index of the DSE, also eroded 960 points or 15 per cent.
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 Tk 3,816 billion at the close of trade on Sunday.
The foreign investors' preferred sectors were banking, non-bank financial institutions, power and energy, pharmaceuticals, telecoms and IT, a leading broker said.
They also focus on some multinational companies those announce healthy dividends and generate good profits, he added.
In 2017, the overseas investors bought shares worth Tk 65.76 billion while they sold stocks worth Tk 48.71 billion to take their net investment Tk 17.05 billion, the DSE data shows.