Despite the much effort, such as international road shows, the negative trend in foreign investments in the country’s bourse has continued since 2018.
Investors from the United States of America, in particular, have dropped dramatically in 2022.
According to the latest Bangladesh Bank projection, US investment in Bangladesh’s stock market will shrunk by 33.7% in 2022 compared to the previous year.
Despite a declining trend, US-based investors remain at the top of the list. Foreign investors residing in the United States accounted for 55.2% of total foreign investment in the capital market.
According to data analysis, investment by US nationals in Bangladesh’s capital market fell to $697.67 million at the end of 2022, down from $1,052.97 million in 2021.
Foreign investment in the country’s capital market fell to $1,263 million in 2022, down from $1,925 million in 2021.
In 2022, the foreign currency balance in non-resident investor’s taka accounts (NITA) was $63.32 million, up from $26.37 million in FY21.
Other foreign investments
Luxembourg investors came in second with $155 million or 12.3%, while United Kingdom investors came in third with $139.42 million or 11% of total foreign investments in 2022.
In 2021, Luxembourg and the United Kingdom invested $289.15 million and $205.92 million, respectively, in the country’s capital market.
Singapore-based investors invested $103.48 million in 2022, somewhat less than the $141.59 million invested in 2021.
In FY22, outside countries invested $64.89 million in the country’s stock market.
Investments from Mauritius and the Cayman Islands fell to $9.65 million and $10.76 million, respectively, in 2022, from $48.57 million and $17.24 million in the previous year.
Investments from Canada, Pakistan and the UAE also dropped to $43.04 million, $12.6 million and $10.12 million respectively in 2022, down from $43.49 million, $17 million and $12.13 million respectively in 2021.
However, investments from the British Virgin Islands soared to $30.3 million in 2022 from $14.07 million in 2021.
What insiders say
Market insiders said that the global investors are distancing themselves owing to their long-held fear of a massive depreciation of the local currency against US dollars and repeated changes in policies that hurt listed firms.
The worry related to the currency deepened first by the Covid-19 pandemic and then by the Russian war in Ukraine.
Experts believe that hiking policy rates in the United States and other countries have made it more desirable for foreign investors to invest in such countries.
Volatility and market dangers may also lead foreign investors to move their cash to safe havens, they noted.
However, in order to attract more international investments, the Bangladesh Securities and Exchange Commission (BSEC) has organized roadshows in the United Arab Emirates, the United States, Switzerland, the United Kingdom, and Japan since 2020. However, the measures have failed to produce any significant evident beneficial results.
