Muhammad Ayub Ali :
In the first half of 2025, Bangladesh’s stock market recorded one of the poorest performances among Asia’s frontier economies, exposing deep structural challenges, geopolitical uncertainties, and mounting economic pressures.
The Dhaka Stock Exchange (DSE), the country’s principal bourse, experienced a significant downturn that rattled investor confidence and raised concerns among market observers.
Between January and June, the DSEX benchmark index dropped 378 points – or 7.25 per cent – to close at 4,838.
Meanwhile, the DS30 index of blue-chip stocks fell 6.4 per cent to 1,816, and the Shariah-compliant DSES index declined even further, by 9.2 per cent, to 1,061.
Market capitalisation contracted by 8.1 per cent, falling to Tk 6.11 trillion, as liquidity dried up. Average daily turnover – a key measure of investor activity – plunged 39 per cent year-on-year to Tk 3.84 billion.
The slump was exacerbated by a sharp decline in retail investor participation, reflecting waning market sentiment. Notably, no initial public offerings (IPOs) were listed on either the main or SME boards during the past 12 months, marking a rare pause in new equity market activity.
Industry insiders attribute part of this slowdown to a more cautious stance adopted by the Bangladesh Securities and Exchange Commission (BSEC), which has prioritised regulatory enforcement over rapid market expansion.
BRAC ELL Stock Brokerage observed that the regulator’s crackdown on long-standing irregularities has slowed the IPO approval process considerably.
Several macroeconomic headwinds have also weighed heavily on the market.
Persistently high interest rates, weak corporate earnings, a depreciating taka, and political uncertainty ahead of forthcoming elections have eroded investor confidence.
Although political developments in August 2024 initially sparked optimism, this has since faded amid renewed electoral concerns.
Global instability – from heightened US trade restrictions to escalating tensions between India and Pakistan, and Iran and Israel – has further amplified uncertainty. Domestically, the fragile banking sector continues to drag on market sentiment.
At least 10 commercial banks have reported significant financial weaknesses, contributing to an 8.4 per cent decline in the banking sub-index. Non-performing loans (NPLs) surged to a record Tk 4.20 trillion by March 2025, more than doubling the previous year’s level.
In response, Bangladesh Bank has announced plans to restructure or close 20 troubled non-bank financial institutions, signalling the start of a broader sector clean-up.
Md Saiful Islam, President of the DSE Brokers Association, told The New Nation that a critical shortage of investable capital remains the market’s biggest challenge, stifling liquidity and long-term growth prospects.
Despite these challenges, some signs of stabilisation have emerged. Inflation is gradually easing, and the foreign exchange market has steadied following the move to a market-driven exchange rate.
Forex reserves rose to $30.5 billion in June 2025, up from $27 billion in late 2024, supported by a fresh IMF loan disbursement.
While MSCI continues to place Bangladesh under “special treatment” status, the country remains represented in the FTSE Frontier Index, with 24 companies currently included.
Asian Frontier Capital (AFC) offers a cautiously optimistic outlook for the second half of 2025, expecting a potential recovery driven by economic stabilisation and regulatory reforms.
To revive market momentum, BSEC has established a new committee to engage with domestic and multinational firms on potential listings.
This initiative, coupled with a renewed focus on corporate governance and transparency, could pave the way for a more robust and resilient stock market in the coming months.
