Foreign investors’ selloff reaches record high in 2021
Foreign investors capitalized the market inflation in 2010 through selling off overpriced stocks
Like the previous three years, foreign portfolio investors continued their selloff in the Dhaka Stock Exchange in 2021 too.
Net selling by foreign investors increased to a historic high of Tk2,648 crore in 2021, following the same of Tk2,606 crore in 2020, according to the DSE data.
The foreigners' continuing selloff in the bull market and despite the securities regulator's all-out efforts to attract foreign and non-resident Bangladeshi investors' funds into the bourses of Dhaka and Chattogram frustrates market observers.
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They said, some fundamental frustration discouraged the foreign investors who seriously look for their freedom to enter into and exit from any position in listed company stocks.
Stock market's shutdown for more than two months during the first wave of the Covid-19 in 2020 and the then-imposed floor prices to arrest the market fall, both criticized as to have been against the free market spirit, discouraged them in the Bangladesh market.
Foreign investors, especially the institutional ones, need their timely exit from any securities or market regardless of the price, they said.
Also, the interest rates capping by the central bank was not a move the free-market fans appreciate.
On top of that, motivated disclosures and improper accounting by some listed firms had long been a discouraging factor to the foreign investors and the recent developments including push for more transparency in disclosures, accounts, corporate governance are yet to bear any fruit for the market in terms of attracting foreign investors.
It is mainly the local investors whose buying spree helped the DSE indices roughly double since the mid-2020.
Foreign investors capitalised the market inflation in 2010 by selling off overpriced stocks and came back in the following years to pick undervalued stocks after the market crash.
In 2018, following a decent market recovery and the then-emerging macroeconomic headwinds and political uncertainty, foreigners again became net sellers in the DSE.
Since then, the trend still persists.
In 2021, foreign investors sold listed securities worth Tk 5,206 crore against their purchase of securities worth Tk2,558, which were Tk6,997 crore and Tk3,890 respectively in 2020.
However, some institutional foreign investors like Asia Frontier Capital keep holding DSE stocks, mainly the blue-chip ones.
