Foreign investments in Bangladesh’s stock market plunged by 70 per cent over the past five years to $914.58 million at the end of December 2025, underscoring sustained capital outflows and a steady erosion of investor confidence.
Foreign equity holdings dropped sharply from $2,995 million in 2020 to $1,925 million in 2021, $1,263 million in 2022 and $1,085 million in 2023, before falling further to $865 million in 2024 and slightly recovering in 2025, according to Bangladesh Bank data.
The trend shows a continuous contraction, with the latest uptick failing to offset the steep losses accumulated over the period.
Data from Bangladesh Bank showed that total portfolio investment, combining equity and debt instruments, stood at $1.56 billion at the end of 2025, down from $4.731 billion in 2020.
The 8.5 per cent annual decline and a 25.1 per cent drop from 2023 indicate that foreign investors are reducing exposure not only to equities but also to fixed-income assets.
The contraction highlights a persistent retreat of foreign investors amid market volatility, macroeconomic pressure and governance concerns.
Equity securities, which dominate foreign portfolio holdings, accounted for $914.58 million, or 58.7 per cent of total portfolio investment.
While this segment posted a modest 5.7 per cent increase from 2024 levels, it remained significantly lower than 2020, indicating that the recovery is partial and fragile.
Transaction data further underscores the lack of investor confidence.
In 2025, foreign investors purchased $164.36 million worth of equities through non-resident investor accounts, while sales stood higher at $174.87 million.
This resulted in a net outflow of $10.51 million despite total transactions reaching $339.23 million.
The country’s stock market witnessed negative net investments for the last eight consecutive years.
The negative net investment signals that foreign investors are gradually exiting the market rather than expanding their positions.
Movements in non-resident investor’s taka accounts also reflect this trend.
Inflows dropped to $145.57 million in 2025, down 36.4 per cent from the previous year, while outflows remained significantly higher at $227.05 million.
The year-end balance in these accounts stood at only $22.44 million, indicating limited reinvestment.
Country-wise data shows a concentrated exposure, with the United States leading foreign equity investment at $391.85 million, accounting for 42.8 per cent of total holdings.
The United Kingdom followed with $187.35 million or 20.5 per cent, while the Cayman Islands held $114.92 million, representing 12.6 per cent.
The concentration suggests vulnerability to shifts in a few major investor bases.
Sector-wise, financial institutions, including banks, insurance and mutual funds, attracted the largest share of foreign investment at $429.54 million or 47 per cent.
Pharmaceuticals and chemicals accounted for $313.10 million or 34.2 per cent, while engineering and steel sectors held a much smaller portion at $54.31 million.
Experts said that the continued decline in portfolio investment reflects structural weaknesses in the capital market, including poor governance, limited depth and recurring instability.
Without reforms to improve transparency, strengthen regulation and restore investor confidence, foreign participation is unlikely to recover meaningfully.
