The persistent downturn in Bangladesh’s stock market has deepened anxiety among investors, stakeholders, and market observers, with many fearing that the market is heading toward yet another prolonged crisis. The main index of the Dhaka Stock Exchange (DSE), the DSEX, has been witnessing more declines than gains for several months, and the latest data from last week has only added to the gloom.
In just four trading sessions last week, the DSEX shed 108 points, equivalent to a drop of over 2 percent. Market capitalization shrank by Tk 1,108 crore, while average daily turnover fell by more than 18 percent, plummeting below the Tk 400 crore mark. Out of 396 listed companies, 299 saw their share prices decline. Only 77 managed to post gains, while 20 remained unchanged. These figures, experts say, underscore the growing pessimism that has gripped the market.
A Vicious Cycle of Decline: The stock market has entered what many investors are calling a “vicious cycle.” Despite a change in government following a student-public uprising in August 2024, and subsequent changes in the leadership of the Bangladesh Securities and Exchange Commission (BSEC), investor sentiment has failed to rebound. The optimism that once accompanied the transition has all but vanished.
Minhaj Mannan, Director of the DSE, did not mince words in describing the situation. “As long-time stakeholders, we have never been so disappointed with the market before. The market is now largely directionless. The BSEC’s indecision and delay in decision-making are pushing the market on an uncertain path,” he told Prothom Alo. “The current BSEC is failing to identify the main problems of the market and take effective measures to solve them. That is why we cannot see any light of hope.”
His concerns are echoed by a senior executive of a leading brokerage firm, who requested anonymity. According to him, the market is now facing a dual crisis - one of leadership and one of confidence. “Earlier, a part of BSEC was involved in corruption and various irregularities. And now, BSEC has become an ineffective institution,” he said. “The internal problems of the institution have also become an obstacle in taking various market-oriented decisions.”
Hopes Dashed After Political Change: Following the fall of the Awami League government on August 5, 2024, due to the student-public uprising, investors initially welcomed the political change with optimism. The DSEX surged by nearly 800 points in just four days, crossing the psychological 6,000-point mark. Market turnover soared past Tk 2,000 crore during that period. But that optimism was short-lived. Eight months later, the index has dropped by over 1,000 points, hovering close to the 5,000-point threshold. Daily turnover has sunk back to Tk 400 crore, and the mood in the market has turned sharply negative.
“Initially, we thought reforms would come quickly,” said a medium-sized investor who has been trading stocks for over a decade. “But we’re seeing the same old pattern - announcements without implementation. It’s like déjà vu from the post-2010 crash era.”
Market participants say the lack of effective leadership at the regulatory level is the root cause. Though the new BSEC leadership was appointed with the promise of reform, little has changed on the ground. Instead, reports of internal disputes between the BSEC chairman and officials have overshadowed any reform initiatives.
Institutional Paralysis at the BSEC: In the past few months, infighting within the BSEC has become a central topic of conversation among investors and industry insiders. According to sources within the commission, a power struggle and disagreements on policy matters have created a deadlock.
A top BSEC official, speaking on condition of anonymity, told the meadia, “There is a shortage of experienced people in the stock market. Those who are experienced are also enjoying various benefits and are reluctant to push for reforms. That’s why we’re now relying on external experts and forming task forces to help with decision-making.”The official added that reforms have been initiated in multiple areas, but implementation has been slow. “We hope that once these reforms are fully implemented, there will be some order restored in the market.”
But investors are growing impatient. Seven months into the new BSEC leadership, no significant policy changes have taken effect. Critical issues - such as enhancing market transparency, tightening disclosure requirements, and restoring investor confidence - remain unaddressed.
A Sector in Decline: According to DSE data, the fall in investor interest is not just hurting retail investors, but the broader financial ecosystem. As trading volumes shrink, so do the revenues of brokerage houses, merchant banks, asset management companies, and even the DSE itself.This prolonged slump bears a striking resemblance to the period after the 2010 stock market crash, when investor confidence collapsed, and the market took years to recover. Despite occasional rallies in the years since, long-term stability has remained elusive.”We’re seeing a repeat of the same cycle,” said another brokerage house executive. “There’s a temporary boost, then a sharp fall, then a period of stagnation. Investors are tired of this pattern.”
The result? Many long-time investors are pulling back from the market altogether. New investors are staying away. And foreign portfolio investors - who are critical for providing liquidity and diversity - remain hesitant due to the regulatory uncertainty and lack of clear direction.
Comparing with the Banking Sector: One of the key frustrations among stock market participants is the visible difference in momentum between reforms in the banking sector and the capital market. Following the change of government, the new Bangladesh Bank governor took swift steps to restore discipline and transparency in the banking sector. These included tightening loan classification rules, clamping down on willful defaulters, and increasing surveillance of high-risk banks.These actions, stakeholders say, helped rebuild trust among depositors and triggered a flow of fresh deposits into the system.
“In the banking sector, we’ve seen the new governor take firm steps,” said a top-level investor. “But in the capital market, we’ve only heard promises. There’s been no action.”
This contrast is creating resentment among investors, many of whom believe the stock market has been ignored in policy discussions. They argue that a strong capital market is essential for supporting industrial growth and financing long-term infrastructure projects - particularly at a time when bank loans are becoming harder to secure due to tighter regulations.
A Way Forward: Amid this crisis of confidence, market participants say that bold, immediate action is required. First and foremost, the internal disputes at the BSEC need to be resolved. The regulatory body must function as a united entity if it hopes to bring the market out of its current slump.Second, investors are calling for a clear, time-bound roadmap for reform. This includes measures such as:Restoring corporate governance in listed companies, Strengthening the monitoring of insider trading and manipulation, creating incentives for high-quality IPOs to increase supply-side depth, improving investor protection mechanisms, developing a national strategy to attract foreign institutional investors.
Lastly, market participants stress the importance of communication. “We want the BSEC to talk to us, listen to us, and be transparent,” said a small investor from Chattogram. “The silence is deafening. And that silence is breeding fear.”
The Psychological Toll: Beyond the numbers, the prolonged downturn is taking a mental toll on retail investors - many of whom have lost substantial portions of their life savings. Anxiety, frustration, and even depression are becoming common among long-time market players.
Online investor groups are filled with stories of loss, regret, and hopelessness. “We were told the market would recover,” reads one post on a Facebook group for retail investors. “Instead, it’s getting worse every week. I don’t know how much longer I can hold on.”This kind of sentiment, if left unaddressed, could lead to a broader disengagement from the stock market. And once retail investors pull out, rebuilding their trust becomes exponentially harder.
Time is runningout: Bangladesh’s capital market is at a critical juncture. The prolonged downturn, coupled with weak regulatory leadership and a lack of reform implementation, has created a volatile and uncertain environment. Investors are not only losing money - they’re losing faith.If decisive action is not taken soon, the damage to investor confidence could become irreversible. The stock market, once a symbol of potential for middle-class prosperity, risks turning into a cautionary tale of neglect, mismanagement, and missed opportunity. In a country striving for middle-income status and economic transformation, a failing capital market is a risk Bangladesh can ill afford to take.
