Norway's SWF investment in Bangladesh stocks drops by 6% in 2024
The world’s largest fund has investments in 69 countries across seven regions, totalling $1.869 trillion
Norway's sovereign wealth fund (SWF), the largest investment fund in the world, reported a 6% drop in its investments in Bangladesh's capital market in 2024, according to data from Norges Bank Investment Management, the fund's global manager.
The SWF, Government Pension Fund of Norway, had investments in only 12 companies in 2024, up from 10 companies in 2023. However, this is significantly lower than its peak presence in 22 companies back in 2019.
Its investments in Bangladesh's capital market fell to $141.93 million in 2024, down from $150.56 million in the previous year. The fund's highest investment in the country was recorded in 2020, amounting to $248.35 million.
In Bangladesh, the fund is managed by Brummer & Partners which invests only to buy shares in the secondary market of the stock exchanges. With a current fund size of Tk1,800 crore, it remains the largest foreign portfolio investment dedicated solely to the country's capital market, according to industry insiders.
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Since its inception in 2015, the SWF has consistently invested in Bangladesh's stock market, starting with an initial investment of $19 million, driven by expectations of strong market returns.
A senior analyst at Brummer & Partners Bangladesh, speaking to TBS on condition of anonymity, attributed the slowdown in investments since 2020 to several factors, including the pandemic, the floor price mechanism in the capital market, and foreign currency fluctuations against the taka.
The fund usually invests in the capital market for a long time, but considering the business outlook it withdraws the investment from time to time, he said.
The fund mainly followed the equities country association according to FTSE (the benchmark provider for equities). However, the decision to invest in a company's shares is based on the fund's own analysis, said the analyst.
Although FTSE previously excluded the Bangladeshi stock market from its index due to the imposition of a floor price on share price movement. Later the Bangladesh Securities and Exchange Commission (BSEC) has gradually lifted the floor price restrictions since January of last year.
However, the floor price remains in place for the shares of the two companies. As a result, while FTSE has lifted its broader restrictions, it continues to exclude the shares of those two companies from its index.
The Brummer & Partners analyst noted that despite FTSE's restrictions, the fund has continued to invest in promising companies with a focus on long-term growth.
Since its initial investments in Bangladesh, the fund has maintained long-term holdings in shares of BRAC Bank, City Bank, Grameenphone, and Square Pharma.
However, while the fund had previously invested in shares of Beximco Pharma, Bangladesh Submarine Cables, Renata, Singer Bangladesh, and Olympic Industries for the long term, it is now gradually reducing its exposure to these companies.
SWF is the largest investment fund in the world. It has invested in 69 countries in seven regions. The total investment value is approximately $1.869 trillion.
Investment reduced in Beximco Pharma
The Norwegian sovereign wealth fund significantly reduced its investment in Beximco Pharmaceuticals last year.
According to data, the fund cut its investment in Beximco Pharma by 93%, bringing it down to $1.43 million by the end of the year.
Additionally, the fund reduced its holdings in several other companies: Olympic Industries by 49% to $1.99 million, Bangladesh Submarine Cables by 53% to $4 million, Singer Bangladesh by 79% to $1.08 million, Renata by 57% to $4.41 million and Walton by 59% to $1.15 million.
However, the fund increased its investments in: BRAC Bank by 43% to $36.28 million, City Bank by 53% to $12.48 million, Grameenphone by 4% to $31.34 million and Square Pharma by 2% to $36.14 million.
Moreover, the fund made new investments in MJL Bangladesh of $3.34 million) and Prime Bank of $8.26 million.
The Brummer & Partners analyst stated that since its inception, the SWF has not repatriated any returns. Instead, the fund manager has reinvested all earnings. Due to a slowdown in investments over the past few years, a significant amount of idle capital has accumulated, which is now being reinvested.
