FY25: Capital market bleeds as investors cling to revival hopes
While BSEC has announced several reform measures, their impact is yet to materialise
The 2024–25 fiscal year began with a burst of momentum in Bangladesh's capital market, driven by political shifts and investor speculation. Though a brief rebound followed amid hopes of stability, the momentum faded quickly after the fall of the Awami League government, ultimately leaving the market in a persistent downward spiral.
By year-end, indices had plunged over 9%, wiping out Tk33,000 crore in market capitalisation and leaving investors bruised and cautious. Yet, market experts hope the securities regulator, Bangladesh Securities and Exchange Commission (BSEC), will learn from past shortcomings and take concrete steps to restore investor confidence.
The Dhaka Stock Exchange (DSE) wrapped up the fiscal year with a 9.91% drop in its key index DSEX, which closed at 4,838 points, while the blue-chip index (DS30) declined by 4.92%, settling at 1,816 points.
During the same period, the market capitalisation of equity shares fell by Tk33,769 crore, bringing the total down to Tk3.29 lakh crore, according to DSE data.
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The capital market had a deeply disappointing year
Investor participation also declined significantly. According to Central Depository Bangladesh Limited (CDBL), the number of beneficiary owner (BO) accounts with share balances fell by 83,619, as many frustrated investors exited the market.
Saiful Islam, president of the DSE Brokers Association (DBA), told TBS that the capital market had a deeply disappointing year. "Investor expectations were largely unmet under the new commission, even though it was appointed by the interim government with a mandate to reform the economy after irregularities under the previous regime," he said.
He acknowledged that reforming a decade and a half of mismanagement will take time. "However, conflict within the BSEC — between commissioners and officials — has further discouraged investors," he said.
Saiful also pointed out that the market still lacks full compliance. "The floor price mechanism remains in place for two companies, which undermines trust — both from local and foreign investors — that the market is on the path to reform."
Although the BSEC has formed a task force to lead reforms, the DBA president expressed dissatisfaction with its transparency and engagement. "We want a formal reform committee. The task force's mandate and activities are unclear to stakeholders. They haven't even held consultations with us on rule amendments," he said.
He further stressed that the commission's efforts so far have not been sufficient to rebuild investor confidence. "We urge the commission to learn from past shortcomings and take concrete steps to restore trust in the market," he said.
What has BSEC done in FY25
The BSEC has rolled out a series of major reforms in the capital market during FY25, following the government's initiative to restructure the regulatory body in response to long-standing concerns over governance, transparency, and performance, especially after the formation of the new interim government.
After appointing a new commission, the interim government tasked it with restoring investor confidence and ensuring greater market discipline. In response, the new BSEC leadership formed several investigative committees to probe alleged irregularities and corruption in the market. These committees have already submitted 12 reports to the commission, which are currently under enforcement.
Additionally, a high-powered task force was established to develop and implement strategic reforms. The task force has submitted five key reports so far, including recommendations on reforms in Initial Public Offerings (IPOs), mutual funds, and margin loan regulations. These reports are expected to serve as a roadmap for improving capital market operations.
Despite these efforts, the primary market remained largely inactive, with stagnant fund flows during this period. No company raised funds through IPOs, rights offer, or preference shares. Moreover, several applications for IPOs, rights issues, and preference shares were rejected by the new commission.
However, the commission has introduced several investor-friendly measures. Most notably, the BO (Beneficiary Owner's) account maintenance fee was reduced from Tk450 to Tk150, easing the cost burden on retail investors.
To support struggling investors, the BSEC also extended the deadline for adjusting negative equity positions in margin accounts. Furthermore, it launched initiatives to enlist fundamentally strong companies and began enforcing compliance with the minimum paid-up capital requirement of Tk30 crore, which has already impacted 60 listed firms.
Besides, BSEC played a role in forming a committee with the Bangladesh Bank and the finance ministry to list the multinational and fundamentally sound local companies in the capital market following the Chief Advisor Muhammad Yunus' direction.
BSEC Director and Spokesperson Abul Kalam said, "The new commission has taken several initiatives to reform the capital market. The investigation committees have already submitted 12 reports, and the task force has submitted five reports. Other reform measures are also underway, which, in the long term, will contribute to the betterment of the capital market."
