Foreign investors continued to pull funds from Bangladesh’s equity market through November, reflecting persistent political tension and deteriorating macroeconomic conditions.

Initial optimism had surfaced after the political transition and the interim government’s reform pledges, prompting overseas investors to raise their stakes in well-performing companies during the first two months of October last year. But the sentiment later weakened as inflationary pressure, policy uncertainty and pre-election tensions eroded confidence.

Salim Afzal Shawon, head of research at BRAC EPL Stockbrokerage, said overseas investors refrained from extending new positions because the political and economic outlook offered little clarity. Some chose to lock in gains before the year-end, while uncertainty over the national election accelerated their sell-offs, he added.

Market analysts noted that foreign investors look for stable policies and continuity under an elected government to safeguard long-term returns. But business activity has remained subdued, with corporate earnings under strain from rising input costs.

Private sector credit growth fell to a historic low of 6.23% in October, signalling weaker investment appetite and tighter lending conditions.

Md Akramul Alam of Royal Capital said a broader crisis of confidence, along with rising banking sector vulnerabilities and record non-performing loans exposed after the political shift, pushed foreign investors further to the sidelines.

Foreign divestment widened in November, with Tk 3.32bn in sales against Tk 1.90bn in purchases. Bangladesh’s equity market also ranked among the world’s worst performers in September and October, adding to the outflows.

Weak corporate results compounded the pressure. Multinational companies — typically the preferred choice for foreign portfolios — reported a 28% fall in combined profits and a 2.54% drop in revenue in the nine months to September. Higher finance costs and political uncertainty weighed heavily on performance.

As sell-offs intensified, prices of blue-chip stocks fell sharply. Foreign ownership in DBH Finance tumbled from 17.32% in October last year to 3.24% by November this year. Stakes in Olympic Industries slipped from 34.30% to 32.93%, while holdings in Grameenphone dropped from 1.03% to 0.87% over the same period.

One exception was BRAC Bank, where foreign stakes rose from 31.92% to 36.11% on the back of record nine-month profits of Tk 15.36bn — surpassing its previous full-year earnings.