DSEX surges 19% in FY26 as reform-led rally breathes new life into Dhaka bourse

Infographic: TBS

The Dhaka stock market rebounded sharply in fiscal year 2025-26, with the benchmark DSEX index jumping 19%, its best yearly performance in years, on the back of sweeping reforms and renewed investor confidence.

The broad-based DSEX index gained 924 points during the fiscal year to close today (30 June) at 5,762 on the final trading session, while the blue-chip DS30 index rose 363 points, or 20%, to 2,178, according to data from the Dhaka Stock Exchange (DSE).

The recovery was also reflected in valuations and trading activity. Total market capitalisation increased by Tk36,421 crore, or 5.49%, to Tk6.98 lakh crore, while daily turnover more than tripled to Tk1,500 crore on the last trading day of FY26 from Tk464 crore a year earlier.

The market ended the fiscal year on a strong note, extending its winning streak to six straight sessions. The DSEX added another 40 points on the final trading day as investors continued accumulating fundamentally strong stocks after the passage of the Finance Bill.

According to EBL Securities, the rally was driven by optimism over the market's near-term outlook and supportive measures in the approved budget, which encouraged broader participation.

Sheltech Brokerage said investor appetite strengthened following market-friendly fiscal reforms, particularly tax incentives tied to stock market investments. Strong buying interest from the opening bell, especially in blue-chip engineering stocks, helped sustain the market's upward momentum throughout the session.

Recovery despite economic headwinds

The market's performance came despite one of the most challenging macroeconomic environments in recent years.

Throughout FY26, investors grappled with contractionary monetary policy, high treasury bond yields, persistent inflation, weak investor confidence, political uncertainty and geopolitical tensions arising from the Middle East conflict.

In its Monetary Policy Statement for July-December 2026, released today, Bangladesh Bank acknowledged these challenges and said the capital market showed encouraging signs of recovery despite tight financial conditions and domestic and global uncertainties.

The central bank said the stock market improved in FY26, marked by higher turnover, increased market capitalisation and renewed investor participation despite the challenging macroeconomic backdrop.

Political transition brings new direction

Market sentiment began improving following the 12-February election, when the BNP-led government assumed office and pledged to rebuild the country's financial markets.

One of its earliest moves was a major leadership overhaul at the Bangladesh Securities and Exchange Commission, appointing veteran corporate executive Masud Khan as chairman.

Speaking after assuming office, he pledged to strengthen market surveillance, improve enforcement, restore transparency and attract foreign investment.

With more than four decades of corporate leadership experience, including serving as Group CEO of Crown Cement and former chief financial officer of LafargeHolcim Bangladesh, Masud Khan said rebuilding investor confidence would remain the regulator's highest priority.

Since taking office, the regulator also withdrew the long-standing floor price mechanism, allowing market forces to determine share prices after years of artificial restrictions.

Budget delivers biggest reform package

A key driver of the market's year-end rally was the FY27 national budget, which unveiled one of the most comprehensive reform packages for the capital market in recent history.

The government cut taxes on dividend income, introduced corporate tax incentives to encourage quality companies to go public and removed the investment ceiling for mutual fund tax rebates.

The reforms also eased listing requirements, offering tax benefits to companies seeking public listings while encouraging greater public shareholding and stronger corporate transparency.

Addressing Parliament during the budget session, Finance Minister Amir Khosru Mahmud Chowdhury said rebuilding investor confidence and restoring a modern financial system had become one of the government's top priorities.

He said the market had suffered from years of poor governance, mismanagement and policy failures, and pledged to shift Bangladesh from a debt-driven financing model to an investment-led economy supported by equity financing and foreign direct investment.

Prime Minister Tarique Rahman also reaffirmed the government's commitment to reviving the market.

"In the past, many people lost their capital due to the stock market crash. There have even been tragic incidents of suicide by those who lost everything, which is deeply painful," he told Parliament.

"We are restructuring the capital market. We believe that under the leadership of our finance minister, the capital market will become vibrant. No one should ever have to lose their capital and everything they own here again."

Central bank eyes larger capital market

Bangladesh Bank has placed the capital market at the centre of its long-term financing strategy.

At a meeting with Chittagong Stock Exchange officials on 29 June, Governor Mostaqur Rahman said a vibrant stock market is essential to complement the banking sector by providing long-term equity financing to businesses.

He unveiled a phased plan to raise market capitalisation by Tk20,000 crore in FY27, Tk25,000 crore in FY28 and Tk30,000 crore in FY29.

Meeting these targets would reduce excessive reliance on bank borrowing and strengthen private sector investment, he said.

The governor also highlighted recent reforms to attract foreign portfolio investment.

Bangladesh Bank has revised the rules governing Non-resident Investors' Taka Accounts (NITA), allowing proceeds from the sale of listed securities to be credited directly to investors' accounts and enabling authorised dealer banks to automatically deduct and deposit capital gains tax.