The participation of foreign investors at the country’s premier bourse Dhaka Stock Exchange (DSE) is growing fast, with the bourse’s turnover of foreign trades doubling in April this year over the previous month.
The total turnover of the bourse’s foreign trades jumped to Tk 182 crore in April, up 108 per cent from Tk 87.51 crore in the previous month.
Stockbrokers and analysts said after a long spell of market volatility, a sentiment grew among investors that the market would turn around, propelling them to inject fresh funds in hope of good returns.
Foreign investors, especially Dubai-based investors, had poured a handsome amount of fresh funds in the Bangladesh’s capital market last month, sources at the DSE, and a stockbroker said.
That was the result of the securities regulator’s several initiatives especially roadshows in many countries, including Dubai to attract more foreign equity investments in recent years, they opined.
Besides, most listed companies were now displaying healthy corporate earnings in the latest quarter, raising further hope about the market recovery, they added.
Talking to The Business Post, the chief executive officer of a leading brokerage firm said some Dubai-based investment firms traded a bulky number of shares on the DSE on April 27 this year.
The turnover volumes of foreign investors at the DSE were Tk 192.46 crore in February and Tk 174.84 crore in January this year. A high official at the securities regulator BSEC said due to the regulator’s several time befitting initiatives, the country’s capital market was gradually becoming lucrative for both local and foreign investors.
Foreign investors were now showing interest in pouring funds in Bangladesh’s stock markets, he added.
On Thursday last, addressing a business summit in the Japan’s capital Tokyo, BSEC Chairman Professor Shibli Rubayat-Ul-Islam said Bangladesh’s capital market was now more stable than markets of most other countries.
As per a report by Asian Frontier Capital, equity investors in 2020 had received the highest returns from Bangladesh, the BSEC chairman remarked at the event.
But, net foreign portfolio investments in securities listed on the Dhaka bourse hit their lowest level in eight years in February this year, as investors wanted to shun losses from the volatility in currency exchange rates caused by the ongoing Russia-Ukraine war.
As on February this year, total foreign equity ownership stood at 3.7 per cent of the total market capitalisation, dipping below a mark that has not been recorded since 2015, according to a monthly business review conducted by IDLC Finance.
The outflow of foreign stock investments from the DSE stood at Tk 135 crore in January this year, against an inflow of only Tk 21.26 crore in the same period.
After such a shaky situation, the DSE’s liquidity situation improved significantly in recent trading sessions, as investor confidence got restored owing to the ease of macroeconomic worries and efficacious corporate earnings.
The DSE turnover reached Tk 967 crore on Thursday, which was the highest over six-months.
Both the indices and the market turnover were now becoming buoyant riding on the price appreciation of large-cap stocks with improved financial results, despite profit-booking pressures from risk-averse investors, according to EBL Securities, a stockbroker.
Earlier, the securities regulator BSEC, to lend a hand to the depressed shares of fundamentally good companies with decent paid-up capital, recently eased the margin regulations. As a result, scope has been created for good fundamental stocks to rise, inspiring investors to put funds into those shares.
Moreover, the global macroeconomic situation is now on the way to a recovery path after the Russia-Ukraine war cast a shadow over the global economy and supply chain, analysts say.
Following the growing optimism, local and foreign investors who once had been on the sidelines, now began to take fresh bets on equities, several stockbrokers said.
Apart from this, many investors who did not liquidate their holdings to avoid losses in the past are now offloading them amid the recent market recovery, making the turnover buoyant, they added.