Index marked downward trend last week as DSE lost 130.75 points

Bangladesh's stock market showed a downward movement last week as it lost 130.75 points and a stable market to level 5198.

The percentage change for the broad index was 1.70%. Market participation was (minus)-15.92% compared to the previous week. The average daily turnover of the market was Tk465.8 crore.

Bangladesh is experiencing substantial economic and banking sector transformations, marked by significant developments across various industries.

The cost of the MRT-5 metro rail project was slashed by BDT 6,898 crore after a reassessment by the Dhaka Mass Transit Company Limited (DMTCL), demonstrating the significant savings achievable through reevaluation of mega projects.

Concurrently, the Bangladesh Small and Cottage Industries Corporation (BSCIC) aims to allocate 1,089 vacant plots and rejuvenate inactive industrial units to stimulate entrepreneurship, inviting applications from interested parties.

The banking sector faces challenges as the call money rate surged above 10% due to a liquidity crunch driven by banks' increased investments in government treasuries, which offer higher, risk-free returns. On a positive note, domestic credit card spending saw a 14.42% rise in September, reflecting heightened consumer activity, while BB Governor Dr. Ahsan H. Mansur emphasized the need for drastic reforms to restore trust in the banking sector, acknowledging past irregularities and regulatory shortcomings.

Meanwhile, leather footwear exports soared to a five-year high in the July-October period, attributed to competitive labour costs and a shift in orders from China.

The tax return submission deadline has been extended to December 31, and the Bangladesh Bank relaxed LC margins on essential imports for Ramadan, aiming to ensure adequate supply and stabilize prices. The World Bank's Business Ready report for 2024 ranked Bangladesh 38th out of 50 countries in trade efficiency, highlighting progress and challenges with scores in regulatory framework, public services, and operational efficiency.

Following the political changeover, bad loans in banks hit a record Tk 284,977 crore, with a significant rise in defaults attributed to irregularities involving Awami League-affiliated businesses.

Austrian companies are keen to invest in Bangladesh, as expressed by the Austrian envoy, while the IMF prepares to review progress on loan conditions for the fourth tranche release.

The BB has directed banks to ensure the smooth exchange of Tk 1, 2, and 5 coins, addressing previous misinterpretations of its instructions. Moody's downgraded Bangladesh's long-term ratings to B2 with a negative outlook due to increased political risks and economic slowdown while reaffirming the need for substantial reforms.

Despite these challenges, Finance Adviser Dr Salehuddin Ahmed assured that no banks would be closed, reinforcing the central bank's stance.

The interim government's reform measures and falling global interest rates have attracted foreign investments, with notable interest in equity markets.
Container handling at Chittagong Port increased by 9% over the past three months, and a new direct shipping route between Karachi and Chattogram is set to expedite trade, reducing reliance on transhipment ports like Colombo and Singapore.

The government permitted 277 firms to import 14.81 lakh tonnes of rice, a mix of boiled and sunned rice, to curb domestic prices.

However, the RMG sector experienced a 2.47% negative growth in exports to the EU during January-September due to energy shortages and high production costs. The rising taka-dollar exchange rate impacted trade competitiveness as the real effective exchange rate (REER) index rose, signalling increased price levels compared to trade partners.

Moody's further downgraded Bangladesh's banking sector to "very weak," citing client confidence issues and limited transparency. Despite the sector's struggles, measures are being taken to stabilise the situation and attract foreign investments, indicating a resilient and adaptive economic landscape.

The agriculture sector, too, is changing as the government focuses on improving yield and reducing dependency on imports. Initiatives to boost local production of essential goods are underway, reflecting a broader strategy to enhance self-sufficiency. Infrastructure projects, including the Padma Bridge and various road network expansions, are expected to spur economic growth by improving connectivity and reducing transportation costs.

Moreover, digital transformation efforts are gaining momentum, with increased emphasis on financial inclusion through mobile banking and fintech innovations. These innovations aim to bring a larger segment of the population into the formal economy.

Overall, these multifaceted developments underscore Bangladesh's dynamic and evolving economic environment, presenting opportunities and challenges for future growth and stability.