Foreign portfolio investments in Bangladesh capital market skyrocketed 26 times in six months

The Bangladesh capital market is flooded with foreign funds as investments grew 26 times in six months.

Markets analysts say a strong Bangladeshi Taka against the US Dollar, stable political atmosphere and no major drop in key macroeconomic indicators lured foreign investors to the stock markets.

According to central bank figures, net foreign portfolio investments worth $184 million came in the first six months of the ongoing FY 2016-17, compared to only $7 million during the same period in the previous fiscal.

“Almost every day we see new foreign entities investing in the Bangladeshi market,” said Shakil Rizvi, who owns one of the major brokerage firms.

 

A former president of the Dhaka Stock Exchange, Rizvi says the surge in foreign funds is creating confidence among local investors, which explains the recent bullish trend.

Figures released by the Bangladesh Bank show the total foreign portfolio investment in FY 2015-6 was $124 million, while during FY 2014-5 it was $379 million.

Explaining the drop in the last fiscal, Rizvi said prices of shares with strong fundamentals, including banks, had slumped. "But now the Taka has gained against the dollar, which caused the foreign investment to rise."

US dollar was traded at Tk 79.25 on Wednesday in inter-bank transactions. State-owned Sonali Bank sold a dollar for Tk 82.95 while foreign bank, the HSBC at Tk 83.50.

Bangladesh's stock markets, which experienced a bearish trend for almost six straight years following the 2010 crash, started to rebound in late last year.