Stock market analysts strongly suggest that Bangladesh should immediately create a conducive environment to attract larger foreign investment in stock exchanges to build the confidence of the local shareholders. “Foreign investment is essential for the capital market to build the confidence of the shareholders,” said a stock market analyst.
He explained, “Local shareholders are very skeptical about investing money in stock exchanges because when they feel that if the capital market can attract investment from abroad it means that the market is growing and hence people get confidence.” There is a general trend that foreign investors would not usually invest money without analysis of the capital market in Bangladesh. When foreign money is invested in the local stock market it sends a lot of positive indications.
The suggestions come in the face of a net fall in foreign investment in the Dhaka Stock Exchange (DSE). During the four months (March to June) of last fiscal, 2018-19, investment from foreign investors has been consistently withdrawn money by selling their shares more rather than buying shares. The total amount of the withdrawn money stands at Tk 183.71 crore which the foreign investors have taken back from the stock market. Such action of selling shares by foreign investors have played a negative role in the stock market and hence discourage local investors from buying shares.
During the same fiscal (2018-19) foreign investment continued to fall. Out of 12 months, investment fell in nine months except in September, January, and February. The foreign investments were negative worth Tk 32.71 crore in July, Tk 5.75 in August, Tk 201.28 crore in October, Tk 22.50 crore in November, Tk 101.53 crore in December, Tk 123.71 crore in March, Tk 154.19 crore in April, Tk 65.17 crore in May and Tk 10.94 crore in June in last fiscal respectively. This figure was positive worth Tk 35.16 crore in September, Tk 175.29 crore in January and Tk 323.18 crore in February during last fiscal.
Due to such a discouraging trend in declining foreign investment, there is uncertainty prevailing in the local stock market for several months. Over the last several months, share prices are continuously falling demoralizing local investors and so the stock market is also shown a downtrend. The prime index of the Dhaka Stock Exchange went down by 99 points during the last fiscal year to settle at 5,421.62. This figure further decreased by 502 points during the last five months.
DSE Director Minhaj Mannan Emon said, “The foreign investors are losing interest on us due to many factors among which banking irregularities is one of them.” He said, “When foreigners sell shares, it sends a negative message about the capital market. So it is very important to attract foreign investment around the year.”
Eminent economist and market analyst Prof Abu Ahmed told Bangladesh Post that the share market plays a crucial role to expedite the country’s overall development. Therefore, foreign investment is very important for the capital market. He said the government should keep a close eye on the market side by side bringing some new IPOs in the market to attract more foreign investors.
