Bangladesh鈥檚 capital markets are mired in an escalating crisis, marked by a mass exodus of retail investors, paralysed regulatory decision-making, and eroding confidence.
Market data reveals a staggering 64,000 investors have liquidated their portfolios entirely since September 2024, underscoring a collapse in sentiment amid stagnant reforms and deteriorating liquidity conditions.
The Bangladesh Securities and Exchange Commission (BSEC), the regulatory body overseeing the country鈥檚 capital markets, has drawn mounting criticism for its failure in reviving the market condition.
Market analysts attribute the stagnation to a breakdown in engagement between BSEC leadership and critical stakeholders, including brokerage firms, institutional investors, and its own officials.
Stakeholders portrayed Khondoker Rashed Maqsood as an increasingly isolated chairman whose leadership style has alienated key market participants.
Rather than pursuing collaborative solutions to longstanding structural weaknesses, the chairman has reportedly adopted a combative stance, avoiding discussions properly with industry professionals, they said.
It failed to approve a single initial public offering this fiscal year鈥攁n unprecedented drought that has choked off fresh capital inflows and stifled market vitality.
BSEC formed a five-member taskforce in October last year to propose reforms for the stock market. Over the past six and a half months, the taskforce has submitted draft amendments on a few regulations concerning mutual funds, margin loans, and IPOs, market operators observed.
The paralysis comes at a perilous moment for Bangladesh鈥檚 stock market, which remain haunted by the legacy of past crashes in 1996 and 2010, they said.
Trading volumes have collapsed, pushing many brokerages toward insolvency, while retail investors鈥攐nce a driving force in the market鈥攁re abandoning equities altogether, they said.
DSEX, the key index plunged to 5,074 points on Sunday from 5,247 points on February 27. It was 6,015 points on August 11.
BLI Securities managing director Minhaz Mannan Emon said that the country鈥檚 stock market has never lost investor confidence as deeply in the past two decades as it has now. 鈥業nvestors feel the market is moving without direction. The absence of leadership and a guiding hand has severely hurt the market,鈥� he said.
He noted that after the political transition, investors had high hopes for reform and market revival, but those expectations have quickly turned into deep frustration. 鈥楢ctive BO accounts are disappearing every day,鈥� he said, adding that foreign investors have largely stepped away from the market.
Emon also pointed out that, for the first time, both stock exchanges and brokerage houses are facing operational losses.
鈥業t鈥檚 becoming increasingly clear to investors that the stock market is not high on the government鈥檚 agenda, and that realisation is only making them more disheartened.鈥�
He further said the reform proposals initiated by the taskforce are being delayed, and the way some proposals are being handled appears irrational and debatable, raising doubts about the seriousness and speed of the reform initiatives.
Market experts said accountability for past misconduct is necessary, but it cannot come at the expense of forward-looking governance.
Market experts said that the crisis carries troubling implications for Bangladesh鈥檚 broader economic ambitions. As the government seeks to position Dhaka as a regional financial hub, the stock market鈥檚 dysfunction threatens to deter foreign investment and undermine capital formation for critical industries.
DSE Brokers Association president Saiful Islam paints a different picture, describing unresolved internal conflicts at BSEC that have paralysed decision-making.
The main victims of this unresolved issue are the investors and the market, he said, adding that the working environment at the BSEC must be restored to normal.
Saiful, who is also a director at BRAC EPL Stock Brokerage, pointed out that while reforms have been visible in other areas of the financial sector, no substantial reform has been observed in the capital market over the past eight months that could restore investor confidence.
The BSEC refers all matters to the taskforce, but the taskforce cannot replace the commission鈥檚 regular functions. As a result, decision-making is delayed, he said.
So far, the taskforce has failed to bring any proposals capable of rebuilding investor trust, and we no longer expect any effective steps from it, he added.
The government should therefore reassess the situation of both the BSEC and the capital market, he concluded.
BSEC chairman Rashed Maqsood did not respond to phone calls or text messages seeking his comments on the allegations and growing concerns in the market. Instead, he referred the matter to the commission鈥檚 spokesperson.
BSEC director and spokesperson Abul Kalam told 抖阴精品 that the claim that the commission was inactive was 鈥榩ropaganda.鈥� He said that a taskforce was formed for market reforms and has already submitted three proposals related to margin loans, mutual funds, and IPOs.
Kalam added that once these rules are finalised, the commission expects investor confidence to return. He said BSEC believes the market should move in its natural course, and the regulator should not intervene unnecessarily. Institutions like stock exchanges and the Central Depository Bangladesh Limited (CDBL) will perform their designated roles as per regulations, he added.
