Even in road show, foreign investment in multinational companies is decreasing
Capital market regulator Bangladesh Securities and Exchange Commission (BSEC) has been conducting road shows outside the country for the last two years to attract foreign investment. Through these road shows, various information including the development of Bangladesh investment returns are presented to the foreign investors. Foreign investment in recently listed multinational companies has declined despite BSEC's efforts to encourage investment in Bangladesh. This picture has emerged in the analysis of the data provided by the main stock market Dhaka Stock Exchange (DSE).
Market stakeholders are criticizing the policy of the regulatory body for reducing foreign investment in the country's capital market. They said that the stock market of the country has been paralyzed by issuing the floor price. As a result, the benefits of doing road shows abroad are not getting. At the same time, many consider the political instability as an obstacle to foreign investment.
It is known that the shares of several multinational companies are traded in the country's stock market. These include - Singer Bangladesh, Unilever Consumer Care Limited, Linde Bangladesh Limited, British American Tobacco Bangladesh, Berger Paints, Marico Bangladesh, Bata Shoe, RAK Ceramics, Robi, Grameenphone and LafargeHolcim Bangladesh Limited. Out of these eleven companies, 6 companies have seen a decrease in foreign investment in the last 9 months. The amount of foreign investment in the three companies is already close to zero. And the amount of foreign investment in the remaining company remains unchanged.
According to the data of Dhaka Stock Exchange, Singer Bangladesh Limited's foreign investment has decreased the most in the last 9 months. In December last year (year 2022), foreigners invested in 4.52 percent of the company's total shares. At the end of September this year, the amount of foreign investment in the company decreased to 3.91 percent. That is, in 9 months, Singer's foreign investment has decreased by 61 percent.
Grameenphone Limited has the second lowest foreign investment among multinational companies. Foreign investment in the telecommunication sector company has decreased by 53 percent in nine months. At present 1.60 percent shares of the company are held by foreigners. British American Tobacco, which ranked third, saw a decline in foreign investment in Bangladesh by 53 percent to 6.39 percent.
Also, Unilever Consumer Care saw a decline of 18.08% in Marico Bangladesh, 10.05% in Lafarge Holcim Bangladesh and 10.01% in Bata Shoe in 9 months. Berger Paints' foreign investment volume has remained unchanged in the last 9 months. On the other hand Robi Aziata, Linde Bangladesh and RAK Ceramics Bangladesh had no foreign investment at the time of discussion.
When asked about the decline in foreign investment in multinational companies, former Professor of Dhaka University and capital market analyst Prof. Abu Ahmed said, BSEC itself knows that foreign investment cannot be brought through road shows. The stock market of Bangladesh has been crippled with floor price, even if we give hundreds of speeches in front of foreigners, they will not come to invest. BSEC is fulfilling its responsibility by doing road shows under certain projects. Foreign investment does not have to be a road show. Regulators thought they could get away with a floor price, but that would mean stalling the stock market. Foreigners will not come to invest in stagnant market.
He said, if there was no floor price, the share price would have gone up. Now it is not possible to buy shares of another company by selling one share. But it is also true that the floor price is tied to the cycle of manipulation.
Abdur Razzak, General Secretary of Bangladesh Capital Market Investors Union, also thinks that the floor price is one of the reasons behind the decrease in foreign investment. However, he said, BSEC has given the floor price in the face of our demand. BSEC has imposed the floor price in the interest of investors at the right time. Perhaps the regulator will lift the floor price after the elections if the political turmoil ends.
When asked about this, Executive Director and Spokesperson of Bangladesh Securities and Exchange Commission Mohammad Rezaul Karim told Barta Twenty-four that due to increase in interest rate, decrease in reserves and increase in value of dollar, there has been some negative impact on the stock market. There is also a concern over elections. Hope the stock market will be good after the election. Then the liquidity crisis will be over. As a result, the confidence of domestic and foreign investors will increase and the stock market will improve.
It should be noted that BSEC started road show in 2021 to attract foreigners to invest in the country's capital market. In view of this, the first phase is in Dubai, the second phase is in the United States, the third phase is Switzerland, the fourth phase is the United Kingdom, the fifth phase is Qatar, the sixth phase is Japan, and the seventh phase is South Africa. In the eighth round, BSEC held a road show on October 23 in Paris, the capital of France, on October 25 in Toulouse and today (Monday) in Berlin, Germany. In this phase, the organization will jointly conduct a road show with the Investment Development Authority (BIDA) in Frankfurt and Brussels, Belgium.