Foreign investors’ involvement in the nation’s capital market has been slowly falling since 2021, and this trend has persisted this year as well. Only Tk 3,800 crore worth of shares were traded by international investors on the Dhaka Stock Exchange (DSE) between January and November of this year, making up just 1.22 percent of the exchange’s overall turnover.

According to DSE data, foreign investors’ trading volume in January stood at USD 15 million. This was followed by USD 22 million in February, USD 14 million in March, USD 35 million in April, USD 41 million in May, USD 23 million in June, USD 40 million in July, USD 31 million in August, USD 36 million in September, and USD 30 million in October. During this period, the average monthly trading volume of foreign investors was USD 28.7 million. In the first half of November, foreign investors traded shares worth USD 10 million. Altogether, over the past 11 months, foreign investors traded USD 310–320 million in the capital market. At an exchange rate of Tk 122.34 per dollar, this amounts to Tk 3,862 crore.

Market analysts say there are several reasons behind the gradual decline in foreign investment in the capital market. Among them are the relatively slow long-term returns of the MSCI Frontier Market Index, which has prompted investors to withdraw funds in search of higher returns in other regional markets. In addition, weaknesses in the country’s banking sector, liquidity risks, exchange rate risks, and a lack of sufficient quality stocks have also influenced foreign investors’ decisions.

Meanwhile, overall market conditions in the past 11 months of the current year have been disappointing. During this period, the DSE’s benchmark index, DSEX, fell by 237 points. The highest average daily turnover was recorded in August at USD 77 million, while the lowest average daily turnover was in March at USD 14 million.

According to available data, foreign participation in the DSE’s total turnover has declined to just 1.22 percent over the past nine years. Prior to this, foreign investor participation had decreased significantly for four consecutive years.

Foreign investors traded Tk 10,388 crore during the fiscal year of 2020, accounting for 3.85 percent of the DSE’s total revenue. With Tk 7,764 crore in commerce, foreign involvement fell to 1.10 percent in 2021. With participation rates of 0.89 percent and 0.77 percent, respectively, international trading on the DSE reached all-time lows in 2022 and 2023. In terms of money, foreign investors exchanged Tk 2,167 crore in 2023 and Tk 4,180 crore in 2022.

The DSE had a modest increase in foreign investor trading in 2024, reaching Tk 3,929 crore, or 1.22 percent of the exchange’s annual sales.