Foreign investors retreating from DSE
Net overseas investment in the Dhaka bourse has been in the negative for the last five months as foreign investors are put off by lack of coordination among regulators.
The amount hit Tk 164.67 crore in the negative in July, when foreign investors purchased shares worth Tk 309.36 crore and sold Tk 474.03 crore, according to data from the Dhaka Stock Exchange (DSE).
For instance, in February the telecom regulator declared Grameenphone a Significant Market Power (SMP), which will squeeze the mobile operator’s business prospects.
This has dampened the confidence of foreign investors, who own around 40 percent of Grameenphone’s shares.
But the Bangladesh Telecommunication Regulatory Commission (BTRC) did not consult with the stock market regulator about the consequence of the decision.
This is not the lone example of non-coordination, said a top official of a leading stock brokerage house.
In 2015, the energy regulator slashed the distribution charges of Titas Gas. As a result, the state-run gas utility lost more than Tk 3,000 crore in market value in the five months to February 2016, he said.
The depreciation of the taka against the US dollar is another reason that caused the foreign portfolio investment to fall since March.
The inter-bank exchange rate stood at Tk 84.50 per dollar on Thursday, up from Tk 82.97 a year earlier, according to data from the Bangladesh Bank.
The foreigners fear there may be further depreciation, which also fuelled the dumping of shares.
The DSE data shows well-performing companies, where foreigners have significant investment, were amongst those in the top losers list due to huge sell off by them.
