Bangladesh stock market lags behind regional peers

Infographic: TBS

Investors in Bangladesh's stock market faced significant losses in 2024, while peer countries posted some of the highest returns during the same period.

According to the Bangladesh Capital Market Review 2024, prepared by LankaBangla Securities, the benchmark index of the Dhaka Stock Exchange, DSEX, dropped by 16.49% in 2024. The market capitalisation also declined by over Tk1 lakh crore during the year.

In stark contrast, peer countries performed much better. Investors in Pakistan saw the highest returns, with the benchmark index of the Pakistan Stock Exchange soaring by 72.49%. Sri Lanka's Colombo Stock Exchange posted a strong 48.80% increase, India's BSE 500 surged by 14.80%, Vietnam's key index rose by 12.67%, and Malaysia's FTSE Bursa Malaysia KLCI gained 12.32%.

Among the peer countries, only Indonesia and Thailand experienced declines, but their losses were much less severe than Bangladesh's, according to the LankaBangla Securities report.

Commenting on the dismal performance of Bangladesh's stock market, LankaBangla Securities stated that the capital market remained bearish throughout 2024 as it navigated numerous challenges. Broader economic uncertainties, political unrest stemming from the quota movement, the resignation of former prime minister Sheikh Hasina, heightened market volatility, low investor confidence, and a sluggish global economy all contributed to the downturn.

EBL Securities said in its yearly market review, that the year 2024 has been an eventful year for the country's capital market as well, with changes in leadership within the stock market regulator following the notable shift in the country's political environment. Investor sentiment mostly remained subdued due to uncertainties surrounding the market outlook amid economic and political tensions.

Moreover, investors' concerns over the market's waning momentum led to a stagnation in trading activities, with daily average turnover in DSE being subdued at Tk630 crore in 2024, while further dropping to Tk410 crore during the final quarter of the year.

Saiful Islam, president of the DSE Brokers Association, told TBS that 2024 had been a frustrating year for investors.

"After the fall of the Awami League government [on 5 August], the market saw a temporary spike, but it didn't last as investor confidence quickly deteriorated," he said. "This was primarily due to the failure of BSEC's reform process to restore trust in the market."

Saiful expressed concerns about the future, stating, "At the moment, we have no optimism for 2025, as we have yet to hear any concrete promises from the new commission."

EBL Securities projected in its report that Bangladesh's capital market is likely to face a challenging environment in 2025, amid persistent political and economic uncertainties.

However, there are glimmers of hope on the macroeconomic front. Factors such as rising remittances, stable foreign exchange reserves, inflows of foreign funding, and progress with the IMF's $4.7 billion loan programme could support a gradual economic recovery.

Global fund manager Asia Frontier Capital (AFC) also anticipates a modest revival in Bangladesh's stock market during the second half of 2025. 

According to EBL Securities, the DSEX index is expected to fluctuate between 5,000 and 5,800 points over the year. Meanwhile, average daily turnover is projected to remain subdued, ranging from Tk500 crore to Tk700 crore, contingent upon improved liquidity and a gradual recovery in market sentiment.