DHAKA Stock Exchange – the country’s main stock market – is witnessing a lethargic trend this month compared with the previous months resulting in a falling down of net overseas investment, thus explaining the sluggishness of the bourse. The securities market lost its attraction to the small investors in the last few years, especially from 2010, for the government’s failure to take proper steps about the market in time. Thousands of small investors lost their capital in the capital markets which was on a bullish trend but market manipulators cracked their dreams. The present trend worries us again about volatility of the market.
The downward trends of the stock market came in a report of an English daily on Saturday. It said, net overseas investment at the DSE fell by 78.58 percent or Tk 284.98 crore in July compared with that of the previous month due to sluggish market trends and less trading sessions as there were only 17 trading sessions as against 22 trading sessions in June. Till last Thursday, foreign investors bought shares worth Tk 166.45 crore against their share sales of Tk 86.80 crore, DSE officials said. At that time, overseas investors bought shares worth Tk 482.51 crore while they sold shares worth Tk 119.87 crore. As per the data, net overseas investment was Tk 77.65 crore in July against Tk 362.63 crore in June. Foreign investors’ turn over at DSE stands at Tk 253 crore in July as against Tk 602.38 crore in the previous month.
The overseas investors usually purchase shares when they find share prices comparatively cheap. On the other hand, they sell shares when the market is in its peak, market operators said. As the market remained almost flat in July compared with June with a poor turnover it kept overseas investors almost silent on the trading floor. The net foreign investment at the DSE hit a fresh all-time high of Tk 572.08 crore in April this year when they bought shares worth Tk 876.43 crore and sold shares worth Tk 304.35 crore. As per the DSE data, net overseas investment was Tk 128.63 crore in May as against Tk 572.08 crore in April. The net overseas investment at the DSE declined to Tk 96.96 crore in March from Tk 121.04 crore in February. That is a falling trend in the amounts invested by foreign investors/traders involved in the DSE market which has prevailed over the last months.
Absence of an incentive package for the capital market in FY 2014-15 budget might have acted as the negative catalyst in reducing the foreign investment. On the other, the non-resident Bangladeshis usually invest money in the market but due to Eid expenses they have channeled the money for family festivity expenditures which has also lowered the overseas investment. Falling down of the benchmark index of the bourses in the last few years might be a possible obstacle to the foreign investors. Because they prefer to siphon their money by investing in the local volatile markets where they could make a large margin of profit and then repatriate it – both the principal and the profit earned thereto – suitably through legal channels. However, we want a stable and pro-investment market, that can contribute to the country’s economy and change the fate of its people in a legitimate manner.
