Foreign portfolio investments in Bangladesh have been negative since 2018, reversing the positive trend seen from 2012 to 2017. Factors such as liquidity flow, the performance of blue-chip stocks, yields in developed markets, weaknesses in the country’s banking sector, floor prices, and macroeconomic concerns have contributed to this change. In 2021, despite strong liquidity flow, foreign investments did not increase due to floor prices.
In 2022, the Russian invasion of Ukraine led to price restrictions and reduced liquidity flow, causing a decline in the market. Rising yields in developed markets further diverted funds away from Bangladesh. As of July 2023, the outflow of funds continues, impacting market turnover. This contrasts with the positive scenario observed from 2012 to 2017 when increased liquidity and attractive blue-chip stocks drew foreign investments. However, since 2018, the trend has reversed due to various factors, including depressed periods in frontier markets, concerns about the banking sector, and the introduction of floor prices. A brief recovery occurred in early 2023, but the situation remains challenging.