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Thursday, April 9, 2009

Foreign investor share sales outstrip purchase

Amid the global financial crunch, selling pressures by foreign fund managers or investors continue in Bangladesh stock market in the first quarter of this year.

Such pressures also slowed net portfolio or foreign investments here.

During January-March 2009, foreign investors sold shares worth Tk 246.99 crore, while they bought shares worth only Tk 27.13 crore, according to Dhaka Stock Exchange (DSE) statistics.

The global fund managers began withdrawing their investments in line with their financial redemption packages to face the recession, according to people who supervise the foreign portfolios in Bangladesh.

Even though economists, experts and stakeholders repeatedly said the market is less allied with global stock markets, the foreign investors were in a profit-taking selling mood since the crisis that began in mid-2008.

“Since the onset of crisis, foreign investors have been more active in selling than purchasing," said a foreign fund manager at DSE.

According to the prime bourse, the present portfolio investment accounts for less than three percent of its total market capitalisation.

In January, the foreign investors sold shares worth Tk 17.13 crore and bought shares worth Tk 3.15 crore, while in February they sold shares worth Tk 117.37 crore and bought shares worth Tk 11.71 crore.

In March they sold shares worth Tk 112.48 crore and bought shares worth Tk 12.26 crore.

However, analysts and portfolio managers see a better situation in near future, as foreign fund managers are gradually returning to Bangladesh market.

“It is now proven that the global recession will not have any significant impact on the Bangladesh market and economy, unlike many other developed countries,” said Equity Partners Ltd (EPL), an investment bank that manages global portfolios.

The global fund managers have started gathering information on the market and securities, which means that they are keen to make fresh investment, the EPL said.

Another portfolio manager said foreign investors are now on the lookout for new investment destinations, including emerging markets like Dhaka.

The banking sector shares were initially the top most choice of foreign investors. The investors, mainly from the US and Europe, now also take interest in the shares in power and utilities, pharmaceuticals and multinational companies.

The Daily Star



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