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Zarif Mahmud: Investments of institutional investors in most of the non-banking financial institutions or leasing companies listed on the capital market have increased. Institutional investors have increased their investments in 13 leasing companies in February this year. On the contrary, some have withdrawn their investment from 9. Stakeholders have questions about whether investment decisions should be made by looking at the picture of institutional investment growth.
Stock market analysts say that the participation of institutional investors in the country’s stock market is very low. Again, the role of most of the institutional investors active in the market is questionable. Most institutional investors act as traders, like small investors.
Institutional investors, like small investors, increase selling pressure when the market is down, they say. Shares are bought again when the market is up. Such behavior of institutional investors has created volatile conditions in the stock market.
They also say that the investment of institutional investors in the stock market should be long-term. But such investments of institutional investors in our market are quite low. Therefore, ordinary investors should not make investment decisions just by looking at the picture of increasing institutional investment. Before investing, you need to look at the institutional investment picture as well as the company’s financial picture.
In particular, the financial condition of the company, the dividend figures and who is in the management of the company, should be carefully reviewed. If the company regularly pays good dividends and has consistency in earnings, then the increase in institutional investment in that company is a good sign – the opinion of the stock market stakeholders.
The review of data shows that among the leasing companies, Bangladesh Industrial Finance Company (BIFC) has the highest number of institutional investors at the end of February this year. Institutional investors hold 41.10 percent of the company’s total shares. One month ago, in January, 41.06 per cent of the company’s shares were held by institutional investors.
As such, institutional investors bought 0.3 percent of the company’s shares in February. Although most of the company’s shares are held by institutional investors, its financial position is not good. The loss-making leasing company has not been able to pay any dividends to investors since 2013.
Apart from BIFC, institutional investment leasing companies include BD Finance, Delta BRAC Housing, Fareast Finance, Fas Finance, First Finance, GSP Finance, IDLC, International Leasing, IPDC, Lankabangla.
Institutional investors bought the most shares of Fareast Finance in February. Institutional investors bought 2.18 percent of the company’s shares again in February. Institutional investors hold 16.21 percent of the company’s total shares, up from 15.3 percent in January.
BD Finance ranks second in the list of institutional investors. Institutional investors bought 1.69 percent of the company’s shares in February. Institutional investors hold 16.80 percent of the company’s total shares, up from 16.91 percent in January.
It is followed by GSP Finance. Institutional investors bought 1.72 percent of the company’s shares in February. Institutional investors hold 10.18 percent of the company’s total shares, up from 7.55 percent in January.
Among the leasing companies that have increased their institutional investment are Delta BRAC Housing, which has grown from 16.8% to 16.14%, Fas Finance from 9.81% to 10.34%, First Finance from 19.48% to 19.48%, and IDLC by 24.4%. 32 per cent to 24.98 per cent, 23.63 per cent to 24.21 per cent in international leasing, 15.69 per cent to 16 per cent in IPDC and 21.2 per cent in LankaBangla.
Institutional investment has been 6 to 22.45 percent, 24.8 percent to 24.6 percent in Premier Leasing and 16.75 percent to 16.94 percent in United Finance. Institutional investors, on the other hand, picked up the most investment from Phoenix Finance in February. Institutional investors sold more than three percent of the company’s shares in February.
Institutional investors held 25.18 percent of the company’s total shares at the end of February, up from 26.55 percent in January. Among other companies whose institutional investment declined were 32.83 per cent to 32.60 per cent in Uttara Finance, 18.6 per cent to 18.36 per cent in Union Capital, 9.55 per cent to 9.31 per cent in Prime Finance and 9.31 per cent in National Housing Finance.
Institutional investment stood at 11.84 per cent to 11.56 per cent, MIDS Finance at 26.60 per cent to 26.56 per cent, Islamic Finance at 17.34 per cent to 16.32 per cent and ICB at 1.8 per cent to 1.75 per cent.
Bay-leasing February data not available. However, the investment of institutional investors in the company declined in January. Institutional investors held 30.35 percent of the company’s total shares in December last year, down from 30.27 percent in January this year.
A member of the DSE said that overall, the financial condition of most of the leasing companies in the country is not good. Many leasing companies are in trouble. However, some leasing companies are doing good business. That is why institutional investors have a distinct interest in the leasing sector. In particular, some leasing companies are consistently paying good dividends to shareholders and there is consistency in terms of earnings.
He said ordinary investors should review the company’s financial picture before reviewing whether institutional investment has increased or decreased. If the financial image of the company is good and the institutional investment also increases then good results can be obtained by investing in that company.
AB Mirza Azizul Islam, former chairman of Bangladesh Securities and Exchange Commission (BSEC) and a prominent economist, told those institutional investors do not play a proper role in our country’s stock market. One of the roles of institutional investors is to stabilize the market. But they also like small investors increase the selling pressure when the share price goes down, they buy shares when the price goes up again. If they behave in such a way, there will be no stability in the market.
Isn’t the sudden increase in institutional investment in any sector a good sign? Asked, he said it would depend on the company’s revenue and dividends. Institutional investment in companies that do not pay good dividends often increases the share price. In this way, if the general investors buy those shares, they may lose later.
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