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Foreign investors continued to pull funds from stocks on the Dhaka Stock Exchange (DSE) owing to the persistent depreciation of the taka against the US dollar.
In May, foreign investors sold shares worth Tk 269 crore against the purchase of shares valued at Tk 96.44 crore, resulting in withdrawal of Tk 172.56 crore, according to the DSE data.
In April, they bought shares worth Tk 64.28 crore against their sales of Tk 244.65 crore. Net sales of foreign investors stood at Tk 148.21 crore.
The local currency depreciated rapidly against the greenback in recent months, which triggered panic among investors about the current account balance. In addition, the rollover activity at the bourse added to the selling pressure.
Analysts said that the falling value of the taka against the dollar as well as the falling capital market could be a major reason for the share sales by the overseas investors.
On Thursday, the Bangladesh Bank sold $28 million to banks at the rate of Tk 92.85 per dollar. From August to June 16, it injected over $7 billion into the banking sector to curb the dollar swings.
“The falling value of the taka against the US dollar worried foreign investors,” capital market analyst Professor Abu Ahmed told The Business Post.
“Foreign investors always prefer to invest in companies with good governance. Some listed companies tend to make false financial reports, which discourage foreign investors from betting on stocks,” he said.
To woo foreign investors, Bangladesh Securities and Exchange Commission (BSEC) recently organized a series of roadshows in several countries, including UAE, the United States, Switzerland, and the United Kingdom. The positive outcome of the roadshows is yet to be seen on the stock markets.
“Foreigners opted for selling shares to stay safe as their share values decreased due to local currency's sliding against the US dollar ,” AB Mirza Azizul Islam, the former Adviser to the Caretaker Government and ex-BSEC Chairman AB Mirza Azizul Islam told The Business Post.
