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Net foreign investment on DSE rises 17.5pc in Feb

graph_1_21504Net foreign investment on the Dhaka Stock Exchange (DSE) rose 17.5 cent in February 2014, compared to the same month last year.

It happened, as foreign fund mangers are now considering Bangladesh capital market lucrative for long-term investment due to low prices of fundamentally-strong stocks, analysts said.

Foreign investors bought shares worth Tk 3.27 billion, and sold stocks worth Tk 2.06 billion in February 2014, taking their net investment in the month to Tk 1.21 billion, according to DSE statistics.

In February 2013, net foreign investment was Tk 1.03 billion, as foreign investors bought shares worth Tk 1.79 billon and sold stocks worth Tk 763 million.

“Foreign investors are injecting fresh fund amid positive speculations, as they think that this is the right time to invest in Bangladesh’s capital market that is lucrative for long-term investment,” Akter H Sannamat, managing director of Union Capital, told the FE.

The current stable political situation and no declaration of tough political programme in near future encouraged the foreign investors to take position in the market, he said.

“The overall growth of foreign investment in Bangladesh market is positive.”

However, he stressed on long-term political stability, macro-economic equilibrium and the government’s initiatives to attract more foreign investment to the country’s stock market.

“Foreign fund managers have increased allocation to the frontier markets to take the advantage of favorable macro indicators and low correlation of those markets with USA, Europe and emerging markets, where alpha generation has become more difficult during prolonged anemic growth,” Md Ashaduzaman Riadh, strategic portfolio manager of LankaBangla Securities, told The FE.

“Among the frontier markets, Bangladesh has showed outstanding and intact performance in different macro and social indicators last year. We have been able to sell the country’s underlying growth stories,” he said.

Uncertainty centering the national election was a crucial risk factor and it is now over. Perceived political stability in coming months will help revive corporate profitability of listed companies and liquidity situation in market, he said.

“Foreigners started betting on subsequent changes in business cycle in Bangladesh from the beginning of 2014,” he added.

However, on month-on-month basis, net foreign investment fell 56.47 per cent in February this year compared to January, as net foreign investment on DSE was Tk 2.78 billion in January 2014.

Foreign investment, also known as portfolio investment, accounted for less than 1.0 per cent of DSE’s total market capitalisation (Tk 2,917.65 billion) as on Sunday.

Banking stocks were initially the foreign investors’ first preference, but stocks of other sectors, like – non-bank financial institutions, power and energy, pharmaceuticals, telecom and IT as well as different multinational companies, also caught their attention.

In 2013, foreign investors bought shares worth Tk 26.52 billion and sold shares worth Tk 7.09 billion, taking their net investment for the year to Tk 19.43 billion.

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Report:  Babul Barman
Source: Financial Express

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