New Delhi, Aug 17 (IANS) Foreign investors continued their sharp withdrawal from Bangladesh’s stock market in FY26, citing policy uncertainty, weak corporate earnings, banking‑sector stress and currency risks, a new report has said.
The report from Bangladesh-based The Daily Star said net foreign portfolio outflows reached $223 million in FY26, up from $138 million a year earlier, according to Bangladesh Bank data.
The publication cited market insiders blaming policy interventions, including the repeated use of floor prices in share markets, for spooking foreign investors.
Net foreign portfolio investment has been in negative territory since FY21, but the outflows are gathering pace.
Bangladesh Securities and Exchange Commission (BSEC), used floor prices, first introduced in 2020 to halt a pandemic‑era selloff and lifted in phases over subsequent years.
The regulator reimposed floor prices on the 169 companies in 2023. The restriction was lifted from all but 35 companies next year.
“After the fall of the Awami League government in August 2024, the floor price was lifted from all but two companies. After taking office in February this year, the BNP government lifted the floor price on the remaining two in June,” the report said.
Despite improvement in the country’s macroeconomic fundamentals experts said it will take time to rebuild investor confidence.
“Once investors burn their finger in a place, they cannot forget it easily,” said Kazi Monirul Islam, CEO of Shanta Asset Management, referring to the legacy of policy moves that made foreign funds wary.
The report cited Saiful Islam, President of the DSE Brokers Association of Bangladesh (DBA) saying MSCI (Morgan Stanley Capital International) paused regular index reviews of Bangladesh after the floor price and will resume regular index reviews from November 2026 following the withdrawal of the floor price.
Further, many banks have been under visible stress, while private-sector credit growth has weakened sharply, weighing on corporate investment, profitability outlook and asset quality.
“Tax and repatriation concerns have also reduced the appeal of the market, as capital-gains taxes, transaction costs and uncertainty over taking money out of the country can affect overall returns,” the report.
—IANS
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