Stocks shed Tk29,500cr in 17 days as Iran war rattles investor confidence

Bangladesh's stock market has lost around Tk29,531 crore in value amid a bearish trend since the start of the US-Israel war on Iran, as persistent sell-offs driven by fears of a prolonged conflict weigh heavily on investor sentiment, according to data from the Dhaka Stock Exchange.

Equities – shares of listed companies – have borne the brunt of the downturn since the war began on 28 February, with their value falling by Tk27,176 crore, while the value of debt securities, including treasury bonds and corporate bonds, dropped by Tk2,468 crore, according to the DSE data.

Market capitalisation, which reflects the total value of all listed companies' outstanding shares, stood at Tk6.88 lakh crore as of today (31 March), comprising Tk3.34 lakh crore in equities and Tk3.52 lakh crore in debt securities.

Before the conflict, on 26 February, total market capitalisation was Tk7.18 lakh crore, with Tk3.61 lakh crore in equities and Tk3.54 lakh crore in debt instruments.

The benchmark DSEX index dropped by a net 421 points over the past month, as most trading sessions closed in the red amid sustained selling pressure. Out of 17 trading days since the conflict began, the market declined on 10 days and rose on only seven.

During these sessions, the DSEX fell by a cumulative 919 points, recovered 498 points, and ended at 5,178 points – reflecting an overall net loss of 421 points.

Fundamentally strong stocks, including BRAC Bank, Islami Bank, BAT Bangladesh, Square Pharmaceuticals, Walton, Pubali Bank, City Bank, Prime Bank, and Eastern Bank, were among the biggest contributors to the index's decline, according to market data.

Market insiders and investors said the bourse had already been sluggish ahead of the election due to concerns over political instability, with expectations of a recovery after the new government took office.

However, the outbreak of the Iran war within days of the new administration assuming power triggered fresh volatility, which continues to persist.

According to market insiders, the war has already started to impact the country's economy, particularly through disruptions to fuel imports, raising concerns over supply. There are also fears of potential interruptions in raw material imports.

If fuel supply and raw material flows do not stabilise, the business performance of listed companies could be adversely affected, prompting investors in the capital market to adopt a cautious stance.

Md Akramul Alam, head of research at Royal Capital, said the oil shock triggered by the Iran-US war is influencing the pace of the country's economic recovery, which is ultimately expected to be reflected in the sluggish stock market.

"The inflationary pressures will erode the production and profitability of publicly traded companies, which signals lower valuations as a result. But some investors may love to win a bet on stocks at a huge discount," he said.

"The market is expected to rebound after this storm ends," he added.

Muhammad Nazrul Islam, MD & CEO of Sandhani Life Finance, told TBS, "Although there were expectations that the market would see a positive impact after the new government took office, the Iran war has created another layer of uncertainty in the market.

"The effects of the war have already started to impact the country's economy, particularly creating concerns over fuel supply. Investors are now closely watching how the Iran war situation unfolds."

Volatility and falling turnover

Sheltech Brokerage, in its March market commentary, said the Middle East conflict triggered broad-based selling.

"DSEX declined by 7.53%, or 421.95 points, on a month-to-month basis, while average daily turnover fell by 24.12% to Tk600 crore, reflecting subdued market participation amid investors' heightened risk aversion due to escalating geopolitical tensions in the Middle East, which raised concerns over potential energy supply disruptions and their broader macroeconomic implications," it said.

"The market experienced extreme volatility during the period, with an initial phase of broad-based panic selling leading to a cumulative decline of over 591.27 points, including a single-day steepest drop of 208.98 points since 2020, following the onset of the Middle East conflict. 

"While a brief recovery supported by bargain hunting was witnessed in the middle of the month, the absence of any tangible de-escalation sign limited follow-through buying and triggered renewed selling pressure into the latter part of the period," it added.

Looking ahead, the brokerage firm said market direction is likely to remain sensitive to geopolitical developments, particularly their impact on energy prices and domestic macroeconomic stability.

Regional markets also slide

Peer markets across the region also recorded sharp declines in March following the start of the Iran war.

Indonesia's IDX Composite index posted the steepest fall at 14.41%, followed by India's Sensex at 11.49%, Pakistan's KSE-100 at 11.38%, Sri Lanka's ASPI at 11.24%, Vietnam's VN-Index at 10.95%, Thailand's SET index at 5.24%, and Malaysia's market at 1.53%, according to an analysis by Sheltech Brokerage.

Despite the losses, the firm noted that Bangladesh's DSEX showed relative resilience, with a comparatively smaller decline of 7.53% amid the geopolitical shock.