Written by The Banking Post
Foreign investors have continued to pull money out of Bangladesh’s stock market, extending a nine-month streak of net outflows through February as global tensions and domestic uncertainties weigh on sentiment.
Despite political stability following recent elections, overseas investors remain cautious. Analysts say persistent macroeconomic challenges, coupled with the ongoing Middle East conflict, have overshadowed any optimism.
“Persistent macroeconomic uncertainties and ongoing geopolitical tensions discouraged overseas investors from making fresh investments in stocks,” said a market analyst.
Weak business conditions have further dented confidence. Private sector credit growth fell to 6.03 per cent in January, signalling subdued economic activity and tighter lending conditions. At the same time, rising global energy prices and inflation concerns linked to geopolitical tensions have clouded the outlook.
Data from the market show foreign investors bought shares worth Tk 18.25 billion in 2025, but sold Tk 20.95 billion—resulting in a net outflow.
The pressure is evident in major stocks, particularly multinational companies that typically attract foreign funds. Profit declines, driven by higher costs and tax burdens, have reduced their appeal. Foreign shareholdings have dropped across several blue-chip firms, reflecting a broader retreat.
Currency weakness has added to investor concerns. A strong US dollar against the taka erodes returns for foreign investors, even when share prices remain stable.
“Foreign investors incur losses as the value of their assets falls when the local currency weakens,” the analyst noted.
Limited investment options and a lack of new listings have also discouraged participation, while frequent policy shifts have heightened uncertainty.
Still, some exceptions remain. A few banks have attracted increased foreign interest on the back of strong earnings and stock performance.
Market observers say foreign investors are now in a wait-and-see mode. A meaningful return of funds will likely depend on easing geopolitical tensions, improved economic clarity, and a more stable policy environment.
