Restoring investors’ confidence in the stock market

After more than 15 years of stagnation, optimism around Bangladesh’s stock market seems to have dimmed.

The way the stock market has been run during the years under the deposed Sheikh Hasina-led government can best be summarized as facilitative to the manipulation of stock prices.

However, a new wave of hope emerged on the horizon after the student-mass-led July- August uprising.

There was a fall of a fascist regime amid bloody massacre.

The appointment of Professor Dr. Muhammad Yunus as the Chief of the interim government created a surge of enthusiasm with the stock index climbing nearing 1000 points.

But the investors’ enthusiasm did not last long. Soon the market again returned to a state of frustration.

Media reports said the Dhaka Stock Exchange (DSE) benchmark index has reached its lowest level in over four months, with experts and stakeholders attributing the decline to a crisis in investor confidence amidst policy rate hikes and prevailing economic challenges.

Last week, the DSEX index further extended its downward streak, closing at 5,115 points, marking a 143-point fall from the previous week.

Experts pointed out the broader economic challenges, noting that the country’s economic trajectory has been compromised over the time.

Besides, they added the market’s recent performance also reflects a shortage of quality stocks.

A lack of monitoring by the Bangladesh Securities and Exchange Commission (BSEC) and minimal punitive measures against substantial violations of regulations for the prevalence of manipulation were also blamed for this.

For instance, after unearthing the price manipulation of quite a few stocks, the BSEC in 2022 had imposed a fine of only Tk 21 crore whereas the wrongdoers gained Tk 253 crore.

In 2023, they gained another Tk 15 crore on being fined Tk 2 crore for price manipulation.

The trend was the same almost throughout the last 15 years.

Allegedly, due to trading aimed at manipulating prices, people ultimately lost their interest in the stock market and now they believe that they will lose money if they invest in the stock market.

However, the interim government seems determined to change the status quo.

It has launched investigations into both large and small players, with various government agencies involved.

For the first time in years, there is a hope that this push for accountability could yield tangible results.

We hope the investors will return to the stocks if these efforts can bring the market into alignment with the country’s economic growth.