The benchmark index of the Dhaka Stock Exchange (DSE) plunged for the sixth consecutive session on Wednesday, reaching its lowest level in five years. Ongoing political unrest, stringent restrictions imposed by the central bank on banks and non-bank financial institutions (NBFIs), and a ban on cash dividends have collectively triggered widespread panic among investors.
The situation intensified after Bangladesh Bank recently prohibited 18 listed banks from issuing dividends for 2024. These banks had availed deferred provisioning facilities and now face restrictions as a result. Furthermore, the central bank is reportedly considering mergers or closures of 20 troubled NBFIs.
These developments have led to a significant decline in the banking and NBFI sectors, dragging the DSEX down to levels last seen during the COVID-19 pandemic in August 2020. On Wednesday, the DSEX dropped by 62 points, or 1.34%, to close at 4,615 points.
In the last six trading days alone, the index has fallen by 186 points. Since August last year—following the fall of the Hasina government—the index has shed 1,400 points, representing a 23% decline.
Market capitalization has also taken a massive hit, plummeting by BDT 723 billion since August 2024 to settle at BDT 6.42 trillion.
According to EBL Securities, “Pre-budget uncertainty and political instability are contributing to market volatility.” The firm added that high interest rates, reduced corporate earnings, the impact of negative equity, and overall economic pressure are eroding investor confidence.
Sajedul Islam, Managing Director of Shyamol Equity Management, stated, “The continuous decline has triggered forced sell-offs from margin accounts, which further accelerated the market fall.” He also noted that institutional investors are facing liquidity shortages and have stepped away from the market, while retail investors remain too cautious to re-enter.
Selling pressure from banking, NBFI, telecom, engineering, and food sectors exerted downward pressure on the index. Share price declines of Islami Bank, Walton, Al-Arafah Islami Bank, BTAT Bangladesh, and Mercantile Bank accounted for nearly one-third of the day’s total index drop.
The DSE-30 index dropped by 16 points to 1,708, while the Shariah-based DSES index also declined by 16 points to 1,008.
Turnover remained weak, slipping to BDT 2.65 billion from the previous day’s BDT 2.73 billion. Out of the 398 traded companies, 295 saw price declines, only 63 advanced, and 40 remained unchanged.
Beach Hatchery topped the day’s turnover chart with a transaction value of BDT 104 million, followed by Fu-Wang Food, Orion Infusion, BRAC Bank, and NRB Bank.
The downtrend extended to the Chittagong Stock Exchange (CSE) as well, where the CASPI index dropped by 139 points to 13,025, and the CSCX index fell by 90 points to 7,943.