A file photo shows investors looking at share price movements on a computer screen at a brokerage house in the capital Dhaka. The total foreign investments in the Dhaka Stock Exchange have dropped to Tk 9,976 crore, which is 2.19 per cent of the total market capitalisation of the bourse, as of May. — New Age photo

The total foreign investments in the Dhaka Stock Exchange have dropped to Tk 9,976 crore, which is 2.19 per cent of the total market capitalisation of the bourse, as the foreign investors have withdrawn around Tk 7,000 crore from the market since 2018.

Of the total market capitalisation at the DSE, listed companies’ sponsor-directors hold shares worth Tk 1,96,388.21 crore or 43.11 per cent, institutional investors Tk 91,656.94 crore or 20.12 per cent, the government Tk 14,805.42 crore or 3.25 per cent, foreign investors Tk 9,976.57 crore or 2.19 per cent, and general investors Tk 1,42,724.25 crore or 31.33 per cent, according to DSE data as of May.

The total market capitalisation at the DSE was Tk 5,16,765.32 crore as of May 31.

The total foreign holding was around 7 per cent of the DSE’s market capitalisation at the end of 2017.

The overseas investors withdrew Tk 2,648 crore in 2021, Tk 2,606 crore in 2020, Tk 478 crore in 2019 and Tk 593 crore in 2018 from of the market.

Besides, they continued selling shares in the year 2022 as they pulled out around Tk 700 crore of the market in the past five months ended in May.

Before the large-scale exodus of foreign funds in the past years, the highest net foreign sales were Tk 676.58 crore in 2010, DSE officials said.

Stock market investors, including the foreign ones, have been struggling with various issues, including rising inflation, continued depreciation of the taka against the US dollar, concerns over external debts and global supply chain disruption on the account of Russia-Ukraine war.

Volatility and high risks on the market might provoke foreigners to take their funds to safe havens, market operators said.

As the United States and other countries raised their policy rates several times, the foreign investors found it lucrative to invest in those countries, they said.

The continued foreign fund exodus has taken a heavy toll on the Dhaka bourse, they said.

The net foreign investment in the DSE has been negative since 2018 due to various reasons, including volatility on the country’s financial market, interest rate ceiling on banks’ loan, floor price restrictions and better trend on the developed markets.

In 2018 and 2019, the foreign investors went for net sales amid concerns over the national election and various anomalies in the financial sectors.

The Covid pandemic in 2020 hit the stock market hard and forced the Bangladesh Securities and Exchange Commission to impose the floor price system on May 19 that year.

Market operators said that the restriction irritated the foreign investors and provoked them to sell off stocks.

Due to rising inflation and currency volatility since 2020, foreign investors found it suitable to shift funds to other countries.

The allegations of financial document fabrication, share price manipulation and approval of fundamentally weak initial public offerings were also the other key reasons for such foreign fund exodus, the market operators said.