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European fund managers have expressed their keen interest in investing in Bangladesh’s capital market and said debt securities and equity markets, including the primary market, are their key focus.
They are also willing to understand the country’s tax regime, the processes of fund inflow and outflow for foreign investors, as well as relevant rules and regulations.
This terrific news came out after a meeting between European fund managers and a custodian bank and the Dhaka Stock Exchange (DSE) Wednesday, said a media statement issued yesterday.
The foreign fund managers have shown their optimism to invest in Bangladesh’s capital market at a time when the country’s capital market has long been undergoing an appalling situation.
Meanwhile, six members of the European Parliament have sent a letter to the European Union seeking its contribution to ensuring a free, fair, and inclusive general election, possibly under a poll-time-neutral caretaker government in Bangladesh.
This political move implies that they want to see a peaceful political ambience in Bangladesh which will enable them to put more investments in the country.
European fund managers, at the meeting with DSE officials, discussed investment opportunities that Bangladesh’s market can offer them.
A brief presentation by the DSE officials, during the meeting, was delivered to the foreign delegates on Bangladesh’s capital market ecosystem and investment process.
Shaifur Rahman Mazumdar, acting managing director of the DSE, affirmed the stock exchange is always ready to extend any sort of support in favour of foreign investors.
The foreign delegates include Christian Mejrup, deputy CIO, EM Sovereign Debt, Denmark; Ulla Huotari, portfolio manager, emerging market debt, Aktia Bank PLC; Thivanka Atukorala, vice president, head of frontier markets rates trading for Asia-Pacific Citi NA Sri Lanka; and Naim Khalid, AVP, markets and securities services, Citi NA, Bangladesh.
On behalf of the Dhaka bourse, its Chief Regulatory Officer Khairul Bashar Abu Taher Mohammed; Chief Financial Officer AGM Sattique Ahmed Shah; Senior GM Samiul Islam, and Mohammad Asadur Rahman; DGM Saied Mahmud Zubayer, and Md Shafiqul Islam Bhuiyan; AGM Kamrun Nahar, and Senior Manager Israt Jahan attended the meeting.
The net foreign portfolio investments in companies listed on the Dhaka Stock Exchange (DSE) hit the lowest level in eight years in February 2023, as investors wanted to shun losses from the volatility of the currency exchange rates caused by the ongoing Russia-Ukraine war.
The total foreign equity ownership, till February this year, 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 foreigners’ stake in equity market capitalisation peaked at 6.8 per cent in 2019 since that time. The US portfolio investment stood at $799.15 million at the end of FY22, down 21.38 per cent from the previous fiscal year.
Frequent regulatory policy changes, weak regulatory framework, and a lack of investor optimism might impede the stability of Bangladesh’s capital markets in the year 2023, while the feeble growth of corporate earnings caused by the recent economic slowdown, according to a survey conducted by LankaBangla Securities, could also obstruct the market prosperity.
Among the listed companies with foreign ownership, Brac Bank Ltd had the highest foreign holdings of 33.5 per cent till February this year, followed by Beximco Pharma with 29.2 per cent.
Besides, Navana Pharma, Renata Ltd, and Square Pharma were among the top ten companies with significant foreign shareholdings.
The companies that manufacture hygiene products logged healthy profits over the last decade, as per analysts’ data. Especially during the pandemic, their profits skyrocketed, as per an analysis carried by The Business Post.
However, investors were advised to exercise caution in placing their bets on the stocks, as the current growth phase might not happen in the future.
The total turnover of the Dhaka 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, sentiment among investors grew that the market would turn around, propelling them to inject fresh funds in the hope of good returns.
