Foreign investors slash stakes in Olympic, BRAC Bank, Grameenphone amid March sell-off
Other large companies also came under selling pressure, though in smaller volumes. Renata Limited saw Tk11.50 crore in sales, followed by City Bank with Tk10 crore and BAT Bangladesh with Tk4.60 crore
Foreign investors significantly reduced their exposure to Bangladesh's capital market in March, offloading shares in leading blue-chip companies including Olympic Industries, BRAC Bank and Grameenphone, reflecting a sharp shift in sentiment driven by global uncertainties and lingering domestic concerns.
Data from the Dhaka Stock Exchange (DSE) showed that foreign investors remained heavily skewed towards selling throughout the month, with overall participation declining significantly.
Foreign turnover stood at Tk272 crore, down 59% from February, signalling reduced activity. Of this, total sales reached Tk215 crore, far exceeding purchases of Tk50 crore, highlighting a clear net outflow of foreign funds.
Among the worst-hit stocks, Olympic Industries saw the largest sell-off, with foreign investors offloading shares worth Tk76 crore. As a result, foreign shareholding in the company fell to 27.62% in March, from 30.26% a month earlier.
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BRAC Bank followed, with Tk34 crore worth of shares sold, bringing foreign ownership down slightly to 36.48%. Similarly, Square Pharmaceuticals recorded Tk32 crore in sales, while Grameenphone saw Tk29 crore worth of divestment, reducing its already low foreign holding to 0.51%.
Other large companies also came under selling pressure, though in smaller volumes. Renata Limited saw Tk11.50 crore in sales, followed by City Bank with Tk10 crore and BAT Bangladesh with Tk4.60 crore.
Foreign investors also trimmed positions in a range of firms, including BSRM Limited, LafargeHolcim Bangladesh, Marico Bangladesh, Prime Bank, Beximco Pharmaceuticals, IDLC Finance and Linde Bangladesh, pointing to a broad-based retreat across sectors.
In contrast, a handful of smaller-cap stocks saw modest inflows. Daffodil Computers attracted the highest foreign purchases at Tk2.38 crore, lifting its foreign shareholding to 0.59%. Ring Shine Textile and Paramount Textile also recorded limited gains.
Overall, foreign investors reduced holdings in 25 listed companies in March, while increasing stakes in just eight. Holdings remained unchanged in 81 firms, underscoring a cautious and selective approach.
As of 6 April, the number of non-resident beneficiary owner (BO) accounts stood at 43,230, according to DSE data.
Global tensions, domestic concerns weigh on sentiment
Market experts attributed the sharp decline in foreign investment to a mix of global geopolitical tensions and domestic structural weaknesses.
Salim Afzal Shawon, head of research at BRAC EPL Stock Brokerage Limited, told The Business Standard, "It's not just the Middle East war. There are many reasons for the decline in foreign investment. However, in the month following the election, we thought that foreign investment would increase. But that didn't happen. Rather, it decreased in an unexpected way."
Analysts said initial optimism following the formation of a new government after the national elections had raised expectations of improved market conditions. However, rising tensions in the Middle East due to the US and Israel's war on Iran disrupted global energy markets and increased economic uncertainty.
For Bangladesh, which depends heavily on imported energy, these developments have fuelled concerns over energy security, inflation and broader economic stability.
Such external pressures have compounded existing domestic issues, leading foreign investors to adopt a risk-averse stance.
Structural issues persist
Market participants noted that overseas investors tend to concentrate their portfolios in a limited number of fundamentally strong companies, given the scarcity of high-quality listed firms in Bangladesh.
As a result, even minor shifts in sentiment can trigger significant sell-offs in these stocks.
The presence of weak or poorly governed companies – often described as "junk stocks" – has further deterred foreign participation.
Analysts emphasised that concerns over corporate governance, transparency, and financial reporting continue to undermine investor confidence, limiting the market's attractiveness to global institutional investors.
Structural barriers, including complex capital gains taxation, inconsistent regulations and difficulties in repatriating funds, have also been cited as long-standing deterrents. Although recent policy measures aim to address some of these issues, their impact has yet to be fully felt.
In response to the declining trend, policymakers have reiterated their commitment to improving market conditions.
Finance Minister Amir Khosru Mahmud Chowdhury recently told parliament that authorities are stepping up efforts to curb market irregularities and manipulation.
He pointed to initiatives to strengthen investigation and enforcement mechanisms, accelerate digital transformation and improve accessibility for both domestic and foreign investors.
