After more than a decade of stagnation, optimism around Bangladesh’s stock market seems to have dimmed. Across the spectrum—from boardrooms of merchant banks to retail investors—the mood is bleak. Investors have faced significant losses, and many have stopped counting. Those still engaged in the market often rely on rumours or speculative moves rather than fundamentals, signalling an unhealthy, volatile environment.
Market insiders describe it as a speculative playground, where sudden spikes of fortune are quickly reversed, resembling tidal waves that come and go with little lasting impact. Critics argue the market is not creating meaningful value, despite some long-term growth among certain corporations.
The question remains — Is the market ready for a new upward trajectory? Can knowledgeable investors confidently re-enter, encouraging others to trust in equities over traditional savings instruments like banks and treasury bonds? Right now, the answer is largely negative.
The malaise has broader implications, especially for bright students aspiring to careers in investment banking. But the delusional market is making them frustrated every day. The ecosystem is so spoiled and dominated by the bad actors that living a decent life out of the stock market has become a challenge.
However, a new wave of hope has emerged on the horizon, after the student-people-led July uprising. There is a fall of a regime amid a bloody massacre. The appointment of Dr Yunus as the interim chief created a surge of enthusiasm, with the stock index climbing nearly 1,000 points. But after the initial optimism, the market has again returned to a state of frustration.
Investors pin hopes on new BSEC leadership
Investors are now looking to the new leadership at the Bangladesh Securities and Exchange Commission (BSEC) to restore confidence. What they expect is clear — strong regulatory oversight, an end to market manipulation, and a framework where investors can sleep soundly knowing their investments are safe.
Despite Bangladesh’s strong GDP growth and global recognition of its economic progress, the stock market has remained in a moribund state during the last fifteen years. Some analysts have even questioned the sustainability of the country’s economic story, speculating that the benefits of large government projects have primarily enriched oligarchs and political elites, with significant sums flowing abroad.
The recent formation of a BSEC investigation committee to examine twelve specific events is a welcome move. Critics recall the incomplete investigation led by Khondkar Ibrahim Khaled in the aftermath of the 2010 market crash, which called for further inquiry to frame it as regulatory breaches. This time, the inclusion of the private sector, regulator, and a legal expert, along with some specific scope of investigation, signals a more serious approach to enforcement.
Reform needed to decentralise BSEC authority
But broader reform is required. The BSEC’s current structure, where authority is heavily centralised with the chairman, has been criticised for being both bureaucratic, inefficient, and corruption-friendly. Many argue that power should be more evenly distributed within the organisation. The chairman and commissioners should be focusing on policy decisions, rather than micro-management.
The BSEC’s dilemma lies in its approach to market malpractices. There is concern that taking tough action against wrongdoers could scare off participants, leading to a drop in the index. However, this view is misguided. Without confidence in regulatory oversight, transparency, and corporate governance, the market will fail to attract investors. Those who can, will continue to put their money into safer options like bank deposits, sanchaypatra, and treasury bonds.
BSEC’s success lies in transparency, not short-term gains
Ultimately, the BSEC’s success should not be measured by short-term index performance. Instead, the focus should be on ensuring a fair and transparent market where companies are listed at appropriate values and manipulation is minimised. Those who break the rules must face consequences—something that has been rare in Bangladesh's stock market history.
The interim government, however, 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 hope that this push for accountability could yield tangible results. Investors are watching closely to see if these efforts will finally bring the market into alignment with the country’s broader economic growth.
The writer, Md Moniruzzaman, CFA, is the managing director and CEO of Prime Bank Securities Ltd.
