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Foreign investment in DSE rises 27pc

Gazi Towhid Ahmed
Foreign investments in the Dhaka stockmarket increased 27.96 percent in February, compared to a month ago, as foreign fund mangers now consider the market lucrative for long-term investment due to low prices of fundamentally strong stocks.
The present situation of the market is suitable for long-term investment as the stock prices of many of the fundamentally strong companies have come down, said a foreign fund manager.
However, he stressed political stability, improvement in power and infrastructure, macroeconomic equilibrium and foreign investors-friendly policies to attract more investment into the country.
Foreign investment in the stockmarket rose by Tk 33 crore in February from Tk 118 crore in January.
Md Saifuddin, managing director of IDLC Securities Ltd, said: “Foreign investment marked a rise as the investors think that this is the right time to
invest in the Bangladesh's stockmarket and the market is lucrative for long-term investments.”
He said most of the stocks dived to their lowest value due to a series of price corrections last year.
Foreign investment was slow in September, December and January as the market experienced a number of downswings and the investors adopted a wait-and-see policy then, Saifuddin said.
He said foreign fund managers opt for big market cap stocks, and consider the corporate declaration trend of a company and its management to take investment decision.
The fund managers also want see good auditors perform auditing for the companies before making their investment decision, he said.
The foreign investors bought shares worth Tk 1,216.83 crore, while sold shares worth Tk 1,138.40 crore last year, according to DSE statistics.
In 2010, the amounts were Tk 1,079.15 crore and Tk 1,755.74 crore.
Saifuddin said the account opening process for the foreign fund managers should be made easier and trading infrastructure should be friendly to increase their participation in Bangladesh.
Foreign investors have a lack of information on good stocks due to a dearth of quality research in Bangladesh, he said.
Saifuddin also said the custodian banks of most of the foreign fund managers have no membership of clearing house of the stock exchanges.
As a result, local brokers take risk of
settlingtrade of the foreigners, he added.
Free funding cost of the foreign fund managers is also an obstacle to increasing foreign investment in Bangladesh as it raises investment cost for them, said the IDLC boss.
He said foreign portfolio investment in Bangladesh is very low compared to other countries in Asia.
IDLC Securities is one of the leading portfolio managers that give stock brokerage services to foreign fund managers.
Goldman Sachs, an international asset management firm based in the USA, invested in Bangladesh through IDLC.
gazitowhid@gmall.com