Foreign investment in Bangladesh鈥檚 capital market plunged by 20 per cent in 2024, marking a sharp and prolonged retreat as investor confidence continued to erode amid deep structural flaws.
By December 2024, the total stock of equity securities held by non-resident investors fell to just $865.25 million, down from $1.08 billion in 2023 and $1.26 billion in 2022, Bangladesh Bank data showed.
The two-year drop of 31.5 per cent signalled a sustained exodus of foreign capital, driven by concerns over policy inconsistency, weak governance and a deteriorating macroeconomic environment.
In 2024 alone, net foreign investment stood at negative $46.39 million 鈥� meaning they sold more shares than they bought.
The outflows were relentless. Except for a brief pause in July through September, every month in 2024 saw net foreign selling. March to June was particularly damaging, with combined net sell-offs of $55 million. By year-end, total foreign sales reached $192.75 million, significantly outpacing purchases of $146.36 million.
This continued a trend seen in previous years, with net investment at negative $8.16 million in 2023 and a massive $195.22 million in 2022.
The long-term picture is even more alarming.
From a peak of nearly $3 billion in 2017, foreign-held equity has now collapsed to less than a third of that, wiping out over $2 billion in portfolio capital in just seven years.
Market analysts attributed the exodus to a mix of regulatory unpredictability, poor financial disclosure practices, repeated interventions like floor price and persistent doubts about corporate governance.
The erosion of trust has only worsened with Bangladesh鈥檚 ongoing foreign exchange crisis, weakening reserves and rising inflation 鈥� factors that have pushed foreign investors to safer markets.
Country-wise data reflected the broader retreat.
The United States, once the largest investor in Bangladesh鈥檚 equities, slashed its holdings from $698 million in 2022 to just $411 million in 2024. Major financial centres, including Hong Kong, Luxembourg, Singapore and the Cayman Islands, followed suit, scaling back their investments sharply.
One major exception was China. According to central bank figures, Chinese equity holdings skyrocketed in 2024 鈥� from a mere $3.23 million in 2023 to $71.35 million by the end of the year, marking a more than 2,000-per cent surge.
This jump made China the third-largest source of foreign equity investment in Bangladesh after the US and the United Kingdom.
Sector-wise, the pull-out was most visible in pharmaceuticals 鈥� traditionally a strong segment for foreign interest 鈥� where holdings collapsed from $531 million in 2022 to $224 million in 2024.
Financials also took a hit, with foreign investment in banks, non-banking financial institutions and insurance firms falling to $225.54 million by December 2024.
As of May 2025, the Dhaka Stock Exchange remains under severe pressure. Turnover is drying up, the benchmark index is falling and institutional activity has thinned to record lows.
Daily trading volumes struggle to cross Tk 300 crore and liquidity remains choked under the weight of weak investor sentiment.
The DSEX, a key market indicator, dropped to 4,785.11 points on May 15 from 5,247 in late February, and from 6,015 points in mid-August 2024.
Since September 2024, nearly 80,000 investors have liquidated their portfolios entirely, highlighting the scale of the collapse. During this period, investors have lost an estimated Tk 65,000 crore in market value.
