Foreign portfolio shrinks Tk120cr as overseas investors cut blue-chip stakes

Foreign investors pared their exposure to Bangladesh's capital market in December, pulling out a net Tk119–120 crore, with the bulk of the sell-off concentrated in a handful of large-cap and fundamentally strong stocks such as Summit Alliance Port, Grameenphone, City Bank and Square Pharmaceuticals.

Data from the Dhaka Stock Exchange (DSE) shows that while foreign investors sold shares worth around Tk120 crore during the month, their purchases amounted to only about Tk60 lakh, resulting in a sharp net decline in foreign holdings.

Among the most notable reductions was that of Summit Alliance Port, where foreign shareholding plummeted from 3.69% in November to just 0.01% in December, resulting in a withdrawal of nearly Tk38 crore. 

City Bank also saw a significant drop, with foreign ownership falling by 0.64 percentage points to 5.40%, equivalent to a reduction of more than Tk25 crore. 

Infographic: TBS

Grameenphone followed a similar trend, as foreign holdings declined from 0.87% to 0.80%, cutting exposure by roughly Tk24 crore. 

Square Pharmaceuticals, one of the most widely held stocks among overseas investors, witnessed a decrease of Tk14 crore as foreign shareholding edged down to 14.52%.

Smaller reductions were recorded in BRAC Bank, Renata, Olympic Industries and Jamuna Oil, while marginal increases were observed in Prime Bank, LankaBangla Finance, National Bank and a few other firms.

Overall, total foreign investment in the Dhaka bourse now stands at around Tk13,000 crore. Of the roughly 360 listed companies, only about 132 currently have any foreign shareholding, underscoring the narrow base of overseas participation in the market.

Infographic: TBS

BRAC Bank continues to top the list of companies with the highest foreign shareholding at 36.06%, followed by Olympic Industries at 32.83%, Beximco Pharmaceuticals at 27.35% and Navana Pharmaceuticals at 19.64%.

Market participants say the recent decline reflects a mix of stock-specific exits and broader portfolio rebalancing rather than a loss of confidence in Bangladesh's equity market.

According to brokerage officials, a large portion of the recorded foreign investment actually comes from expatriate Bangladeshis. They note that genuine foreign institutional investors are actively present in no more than 25 listed companies, primarily large-cap firms with relatively strong fundamentals and liquidity.

Norway's sovereign wealth fund, a limited number of UAE and EU-based institutions are among the key foreign players in the market, according to market insiders.

A managing director of a leading brokerage firm said foreign investors remain cautious due to the limited scope for diversification, as Bangladesh has a relatively small pool of investable large-cap stocks that meet the risk, governance and liquidity standards of global institutional funds.

Ahsanur Rahman, chief executive officer of BRAC EPL Stock Brokerage, pointed out that December traditionally sees portfolio adjustments, as foreign institutions prepare year-end financial statements and rebalance their holdings in line with global asset allocation strategies. Such rebalancing often leads to temporary outflows, particularly from frontier and emerging markets, as funds lock in profits or adjust exposures to manage risk.

He further said, "Some foreign investors often visit our office, and they express their interest in investing in the country's capital market. We hope that the ongoing country's tussle situation will be improved, and after that, the foreign investment may increase."

Analysts also note that many global funds track FTSE equity country benchmarks, and Bangladesh's continued partial exclusion from these indices remains a structural challenge. The country was removed from FTSE indices following the imposition of floor prices on stock movements, which constrained price discovery and liquidity. 

Although the Bangladesh Securities and Exchange Commission has gradually lifted most of these restrictions since January last year, floor prices remain in place for shares of two companies, keeping them excluded from the FTSE universe.