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Dhaka stocks experienced a grim year in 2024 with investor confidence eroding due to the country’s worsening economic conditions and political instability.

The year also saw significant changes in the capital market’s leadership following political shifts in the country.

The political landscape changed dramatically in August 2024 when an interim government, led by Professor Muhammad Yunus, replaced the previous Awami League government following a student-led mass uprising.

Despite the changes, market observers said the interim government failed to take meaningful steps to recover the market or restore investor confidence.

The key index of the Dhaka Stock Exchange, DSEX, fell by 16.49 per cent, or 1,030.06 points, closing at 5,216.44 points on December 30, 2024, compared with 6,246.49 points on December 28, 2023.

The total market capitalisation of the DSE also decreased by Tk 1.18 lakh crore in the year, signaling a significant loss of value for investors.

Market experts attributed the capital market’s poor performance to several economic challenges, including rising inflation, increasing external debts, volatility in the foreign exchange market, and dwindling foreign reserves.

In addition to these economic factors, they pointed out issues such as market manipulation, weak financial statements, poor initial public offerings, and pressure from foreign investors for selling their shares.

Most investors avoided making long-term investments or engaging actively in the market due to their lack of confidence in its momentum, experts explained.

The new commissioners of the Bangladesh Securities and Exchange Commission, appointed after the political change in August, failed to implement any effective short-term or medium-term plans to revive the struggling market.

Saiful Islam, president of the DSE Brokers Association of Bangladesh and a director  at BRAC EPL Stock Brokerage Ltd, said that the year 2024 was extremely challenging for brokers.

‘The first quarter saw the imposition of a floor price, the second quarter was marred by political turmoil with mass uprisings, and the third quarter witnessed a brief period of investor confidence that quickly faded due to lack of returns,’ he said.

The floor price restriction, imposed by the BSEC in July 2022 to prevent excessive falls in stock prices, remained in effect for most of 2024.

However, instead of stabilising the market, the restriction limited investors’ ability to adjust their portfolios and stifled market activity.

The BSEC began lifting the floor price restrictions in January 2024 for most companies and removed them entirely in phases by August.

Saiful added, ‘If the overall turnover remains unchanged in 2025, the industry could face an existential crisis, making it even harder to retain investors in the market. Unlike the Bangladesh Bank governor, who announced initiatives to regain public trust in the banking sector, the new BSEC commission has taken no such steps in recent months.’

He further commented, ‘Reforms are long-term goals, but people expect immediate returns. The stock market regulators need to take steps to address this.’

Market operators criticised both the interim government and the BSEC for failing to regain investor trust or stabilise the market. Other than imposing fines on a few individuals, the regulators have not taken substantial action against the main manipulators in the market.

Minhaz Mannan Emon, a shareholder director of the DSE, remarked, ‘Irregularities became the norm over the past 15 years. The BSEC controls everything in the market,

from listing and delisting IPOs to overseeing merchant bankers and brokers. Previous two commissions abused this power, turning manipulation into the market’s defining characteristic.’

He added, ‘The regulators’ structure hasn’t changed, which is why the market continues to receive incorrect information, creating divisions among stakeholders.’

Faruq Ahmad Siddiqi, a former chairman of the BSEC, noted that economic pressures also played a significant role in the market’s downturn.

He said, ‘A decline in bank liquidity, lower revenue collection, high inflation rates, and increased internal borrowing collectively reduced the flow of funds to the stock market. Additionally,

high bank interest rates and attractive returns on treasury bonds have shifted people’s focus toward investing in banks and bonds rather than the equity market.’