Net foreign investment at Dhaka Stock Exchange fell in the last two months owing to a government move which puts a number of restrictions on Grameenphone alongside a fear of further depreciation of the local currency.
Investment from foreign investors hit Tk 154 crore in the negative zone in April after they bought shares amounting to Tk 257 crore and sold issues worth Tk 411 crore.
The net foreign investment was Tk 123 crore in the negative in March.
The move from Bangladesh Telecommunication Regulatory Commission (BTRC) against Grameenphone, the largest stock in the DSE with a market capitalisation of Tk 48,529 crore, has spooked foreign investors, said a top official of a brokerage house, which deals with foreign investment.
The commission declared Grameenphone as the operator with Significant Market Power (SMP) in an attempt to enhance competition in the industry. On this ground, the regulator has already taken some decisions that will squeeze the business of the mobile phone operator.
The BTRC’s decision came in February and the foreign investors’ investment has been declining since March.
The top official of the brokerage house says foreign investors sold not only the stocks of Grameenphone but also those of other companies as they lack confidence.
Grameenphone’s shares fell to Tk 354 yesterday from Tk 416 in the last two and a half months.
This was not the first time regulators’ sudden moves against listed companies have hurt stocks.
For example, Bangladesh Energy Regulatory Commission (BERC) cut the distribution charge for Titas Gas in 2015. As a result, the utility company lost more than Tk 3,000 crore in market value over a period of five months.
“Any sudden decision hampers investors’ decision,” said the brokerage house official, adding that there was a lack of coordination among all regulators.
The CEO of another brokerage house blames the depreciation of the local currency which led foreign investors to sell shares in order to book profits.
Yesterday, $1 went for Tk 84.50, up from Tk 82.98 on the same day a year ago, Bangladesh Bank data showed.
Foreign investors apprehend a further depreciation of the taka as the central bank was artificially preventing the devaluation of the currency.