BANGLADESH’S economy has earned global praise for its steady growth, rising GDP, and infrastructure development. Yet, behind this promising macroeconomic narrative lies a capital market in deep distress. Once considered a barometer of national prosperity, the stock market now reflects a grim reality — defined by persistent instability, eroded investor confidence and regulatory dysfunction. When reforms stall and even investor suicides make headlines, the issue extends far beyond trading floors. It becomes a national alarm, questioning the very sustainability of our economic success.
Bangladesh’s gross domestic product has increased significantly over the past decade. At the same time, the remittance earnings, foreign currency reserves, and infrastructure development have also shown noteworthy progress. However, the impact of these positive changes has not reached the capital market. On the contrary, general investors are continuously losing capital and becoming despondent, to the extent that tragic incidents such as suicides have occurred. This should not be merely explained as a market crash — it reflects a deep structural and policy failure.
After the major crash in 2010, the market remained stagnant for a long time. Although some reform efforts were made during the long tenure of Dr M Khairul Hossain, the former chairman of the Bangladesh Securities and Exchange Commission (BSEC), no effective results were achieved. Later, under the leadership of Professor Shibli Rubaiyat-Ul-Islam, some positive initiatives were launched, such as the introduction of an SME platform, reforming the corporate governance code, etc. However, these efforts could not yield the desired results due to a lack of timely implementation.
The ‘floor price’ mechanism, considered an unusual event in the global market, has had to be adopted multiple times in Bangladesh’s stock market. This abnormal strategy has had negative impacts on the market, such as liquidity crises, distortions in price processes, and investors’ funds being tied up. Amidst this, although the floor price was withdrawn upon the recommendation of market analyst Abu Ahmed, instead of revitalising the market, it led to further decline. In reality, it is observed that taking strategic measures without restoring investors’ confidence further weakens the market.
Since the new commission took over under the leadership of Khondoker Rashed Maqsood on August 18, 2025, the internal conflicts and administrative instability of the commission have made the market even more perilous. Some decisions of the commission have generated extreme resentment among investors, resulting in unprecedented events such as protests, human chains, besieging the BSEC building, and lawsuits against officials, along with temporary suspensions.
In recent months, the Dhaka Stock Exchange (DSE) has experienced significant volatility, marked by a sharp decline in investor confidence and market performance. The DSEX index dropped by 302 points in April 2025 alone, resulting in a market capitalisation loss of approximately Tk 17,000 crore. Over the broader fiscal year 2023–24, the index declined by 1,015 points, with the total market capitalisation shrinking by over Tk 100,000 crore. Daily transactions have fallen below Tk 250 crores, which is the lowest in the past decade. Since December 2021, the DSE index has dropped significantly — from 7,423 points down to around 4,800 — marking a steep decline of 2,623 points over the past three and a half years.
On the other hand, some influential individuals from the time of the Shibli Commission, especially the followers of the former spokesperson of DSE, Saifur Rahman, have become vocal against the current commission. As a result, two opposing groups have emerged within the commission — one side wants reform, while the other side wants to maintain the continuity of the old system. This division has raised questions about the transparency and legitimacy of the regulatory body.
On May 11, 2025, the chief adviser organised a high-level meeting attended by regulatory authorities, stakeholders, and market participants. Although there was a temporary sense of stability, no long-term solution was found. The market collapsed again, and the crisis of confidence deepened further.
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Way out
— Ensure a transparent and independent regulatory agency where the commission is free from political influence and group pressure.
— It is essential to introduce market-based incentives and procedures, such as establishing market makers, alternative trading systems (ATS), short selling, and initiating options trading.
— In addition to enhancing investors’ financial literacy, it is necessary to popularise the bond market, mutual funds, and other alternative investment avenues.
— Policy support should be ensured for foreign investors, such as tax reductions and swift repatriation facilities.
— A unified leadership must be built by resolving internal conflicts within the commission — where the development of the capital market will be the primary focus.
If Bangladesh aspires to build a truly sustainable economy, it can no longer sideline its faltering capital market. The era of quick fixes must end. Only through unified action — by the government, regulators, investors, and the media — can trust be restored and the market reborn. Without it, our economic success will remain a hollow statistic, echoing progress without a foundation.
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Md Ashraf Ali is an assistant professor of business administration at Sonargaon University.