The Asiapost News

Dhaka, Bangladesh – The Dhaka Stock Exchange (DSE) is reeling from a persistent decline, with the DSEX index shedding 13.43 points to close at 4,922.17 on 1 May 2025, marking a third consecutive day of losses after a 17.69-point drop on 30 April. This downturn follows a brief rally in August 2024, when the DSEX surged 786 points amid post-government change optimism, only to falter under mounting economic and political pressures. Investors are grappling with a volatile market shaped by regulatory overhauls, macroeconomic challenges, and governance concerns under the interim administration led by Muhammad Yunus.

A key driver of the DSE’s struggles is the ongoing “cleaning” process, as described by Anisuzzaman, a special assistant to Yunus. This initiative aims to rectify years of market irregularities, such as manipulation and lack of transparency, but has triggered short-term pain. The Bangladesh Securities and Exchange Commission (BSEC) extended the deadline for brokerage houses to adopt tamper-proof back-office software to June 2025, with only 113 of 291 firms compliant by May. Non-compliance risks trading suspensions, adding uncertainty for investors. The phased removal of floor price regulations, fully lifted for most stocks by January 2024, has also unleashed pent-up selling pressure, contributing to a 14.2% year-to-date DSEX decline in H1 2024.

Macroeconomic headwinds are further eroding confidence. The IMF slashed Bangladesh’s 2025 GDP growth forecast to 3.8% from 4.6%, reflecting high inflation, currency depreciation, and weak demand. These pressures, exacerbated by global commodity price spikes and a slowing US economy (contracting at 0.3% in Q1 2025), are straining Bangladesh’s export sectors, a critical market driver. The banking sector, a DSE heavyweight, saw its market capitalization dip to 670,071.15 million BDT in January 2025, down from 676,446.85 million BDT in December 2024, signaling investor caution.

Yunus’s interim government, unelected and military-backed, is central to the market’s woes. Its controversial policies, including a unilateral decision to establish a UN-proposed “humanitarian corridor” to Myanmar, have sparked backlash from the Awami League, BNP, and Jatiya Party, with BNP’s Tarique Rahman labeling it ‘undemocratic’. This political discord, coupled with labor unrest demanding a Tk30,000 minimum wage, has fueled perceptions of governance fragility, spooking investors. The government’s failure to communicate clear economic strategies has left the market directionless, with local media offering scant coverage of these issues.

Despite some bright spots—such as the service and real estate sectors outperforming with a -3.4% return in H1 2024—the DSE’s outlook remains grim. Analysts warn that without decisive action to stabilize the political environment and accelerate reforms, the market’s slide could deepen. Investors, already battered by a 35.3% drop in average daily turnover in 2022, face a precarious path ahead as Bangladesh navigates this turbulent chapter.