Stock investors lose nearly 59% of every $100 invested in 2025: MSCI Bangladesh

Bangladesh's equity investors have suffered steep losses over the long term, with each $100 invested in the country's stock market shrinking to just over $41 in dollar terms, reflecting a value erosion of nearly 59%, according to data from Morgan Stanley Capital International (MSCI).

The figures underscore the prolonged underperformance of Bangladesh's capital market compared to both global and frontier peers, raising fresh concerns about market structure, policy consistency and investor confidence.

According to MSCI's cumulative index performance data calculated up to December 2025, the MSCI Bangladesh Investable Market Index (IMI) stood at $50.39 in gross return terms, far behind the MSCI Frontier Markets IMI at $235.35 and the MSCI All Country World Index (ACWI) IMI at $428.49. 

The divergence becomes even starker when net returns are considered. While the MSCI ACWI delivered net returns of $407.18 and frontier markets returned $218.07, MSCI Bangladesh's net return dropped to just $41.25. This means an investor who put $100 into Bangladesh equities over the long run lost nearly 59% of the original value in US dollar terms.

Market analysts say the poor performance reflects a combination of stagnant stock prices, weak liquidity and significant currency depreciation. Although some shares have shown resilience in local currency terms, the sharp fall of the taka against the US dollar has severely eroded dollar-based returns. As a result, even periods of relative price stability in taka have translated into losses for foreign investors once exchange rate effects are taken into account.

MSCI data also show that since November 2009, the MSCI Bangladesh Index has generated an average net return of minus 3.34%, compared to positive returns of 6.29% for frontier markets and 10.07% for the global index. This long-term underperformance has placed Bangladesh at the bottom among comparable markets tracked by global fund managers.

The MSCI Bangladesh IMI, which currently includes 36 companies and covers about 99% of the free-float adjusted market capitalisation, has a total market value of around $5.18 billion. The index is heavily concentrated in a few large-cap stocks, including Square Pharmaceuticals, Beximco Limited, BRAC Bank, Beximco Pharmaceuticals and Grameenphone. Market participants say this narrow investable universe limits diversification opportunities for global funds and increases vulnerability to stock-specific shocks.

A managing director of a brokerage firm said global fund managers largely rely on MSCI indices when allocating capital across countries. Persistent regulatory interventions, such as the imposition of floor prices, frequent policy changes and restrictions on price discovery, have reduced Bangladesh's attractiveness in global index frameworks. Both MSCI and FTSE Russell have maintained restrictions on Bangladesh-related indices due to concerns over market accessibility, liquidity and transparency, further dampening foreign interest.

Foreign investor activity has also weakened sharply in recent months. Data from the Dhaka Stock Exchange show that monthly foreign turnover fell to just $5 million as of mid-December, compared to $30 million in October and $22 million in November. Earlier in 2025, foreign participation had shown brief signs of recovery, peaking at $41 million in May and $40 million in July, but those inflows proved short-lived as global investors steadily reduced exposure.

December witnessed notable selling pressure in several heavyweight stocks, leading to a net foreign outflow of around Tk118 crore. According to the monthly shareholding report, foreign investors sold shares worth roughly Tk120 crore during the month, while buying amounted to only about Tk2 crore. Most of the selling was concentrated in large-cap stocks that traditionally dominate foreign portfolios.

Currently, total foreign investment in the Dhaka bourse stands at around Tk13,000 crore, with only about 36% of listed companies having any foreign shareholding. 

The MSCI Bangladesh Index, launched on 1 December 2009, is part of MSCI's broader factor-based analytical framework. MSCI Factor Classification Standards (FaCS) group equities by key drivers of risk and return such as value, size, momentum, quality, yield and volatility – factors widely supported by academic research and validated by MSCI. These factor groups are built using 16 underlying metrics, including book-to-price, earnings and dividend yields, leverage, long-term reversal, earnings variability and beta, derived from MSCI's Barra GEMLT global equity risk model to enable transparent and intuitive fund comparisons.

MSCI Inc, formerly Morgan Stanley Capital International, is a US-based global financial services firm headquartered in New York. It provides widely used equity, fixed-income and real estate indices, multi-asset risk analytics, and ESG and climate solutions, including the MSCI World, Emerging Markets and All Country World indices.

Analysts said the MSCI index methodology is more fundamentally driven and therefore preferred by global fund managers, while the Dhaka Stock Exchange's index construction does not fully follow such internationally accepted standards. 

As a result, the country's indices often fail to accurately reflect fundamentally strong stocks. This mismatch means local indices provide limited guidance on underlying corporate performance, making it difficult for investors to make informed and timely investment decisions based solely on domestic benchmarks.