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As hope builds with political change and reforms, Foreign investors are returning to the Bangladesh Stock Market

Foreign investors are making a comeback to Bangladesh’s stock market after a long streak of low activity, encouraged on by recent political changes and initiatives to strengthen governance. Investor confidence has increased as a result of the interim government’s initiatives, which involve introducing tough measures against stock manipulators and executing changes to regulate the foreign currency market. Investors from outside are hopeful that the new administration would not restore floor pricing mechanisms and other market interventions, which were previously viewed as unstable.

Data from Bangladesh Bank shows a significant rise in foreign portfolio investment, reaching $49 million in the July-August period of FY 2024-25, compared to just $3 million in the same period last year. This renewed interest is driven by the declining interest rates in US banks and the attractive prices of well-performing stocks in Bangladesh. Analysts suggest that foreign investors are focused on companies with a strong track record, as no new high-potential stocks have been listed in recent years.

The country’s stock market was adversely affected by the previous government’s interventionist policies, including floor prices, but the removal of the autocratic regime has renewed hopes for reform. With the US Federal Reserve lowering interest rates, capital is shifting towards emerging markets, with Bangladesh benefiting from this trend. Investors are also encouraged by the resumption of FTSE Russell’s reviews of local stocks, which had been suspended under previous market conditions.

Experts emphasize that sustained foreign interest in Bangladesh’s stock market depends on maintaining good governance, transparent policies, and ensuring the listing of high-quality stocks. The hope is that these reforms will lead to a more stable and attractive market for international investors.

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