Dhaka’s market re-rating will be decided in the Strait of Hormuz

The re-rating of the Dhaka Stock Exchange is not a matter of if but of when and when is a function of a single variable that Dhaka cannot control: the day the guns fall silent over the Strait of Hormuz.

There are times when old-school financial analysis, which is based on the assumption that stock prices move on fundamentals, determined solely by earnings, dividends, and the discount rate applied to future cash flows, makes sense. For the Dhaka Stock Exchange, that holds true for many stocks, in different phases of time. 

However, at present, the single most consequential variable for the Dhaka Stock Exchange has the most to do with whether oil tankers can transit a narrow waterway at the southern tip of the Persian Gulf, without being fired upon.

The argument I want to make is not complicated, though it requires following a chain of causation across several links before it arrives at the conclusion that matters to investors. 

Bangladesh imports approximately 95% of its energy needs, which means that the country's fiscal position, its foreign exchange reserves, the price of food in its markets, the cost of fertilizer for its farmers, and ultimately the confidence of the foreign institutional investors who are the only source of capital large enough to re-rate its stock market are all downstream consequences of a single upstream fact: whether the Strait of Hormuz is open for business or not.

The strait has been closed, in practical terms, since the Iran-US-Israel conflict began in late February 2026, and its closure has set in motion a transmission mechanism that runs through Bangladesh's economy with the logic of a falling row of dominoes, each one toppling the next in a sequence that is predictable in its direction even if the exact timing of each stage remains uncertain.

The sequence retail investors miss

The first thing that happens after a genuine, sustained ceasefire is not that oil prices fall immediately and Bangladesh breathes a sigh of relief. The first thing that happens is that the physical work of reopening the strait begins: mine clearance operations, insurance underwriters cautiously re-evaluating their war-risk premiums, shipping companies calculating whether the route is safe enough to resume commercial transits, and maritime authorities issuing the guidance that allows tankers to move again without a naval escort. 

This process takes approximately three months from the date of a credible ceasefire, not because the bureaucracy is slow but because the physical realities of mine clearance and the psychological realities of risk recalibration simply cannot be compressed much beyond that.

Only after Hormuz traffic is genuinely normalised does the oil price begin to reflect pre-war supply conditions, and even then the spot premium that accumulated during the conflict takes another two months to fully dissipate as traders confirm that the supply is real and sustained rather than a temporary ceasefire window that will close again. We will get into a model that forecasts timelines, later on, in this piece. 

For Bangladesh, whose state-run agencies have been forced onto the spot market for the entirety of the conflict at enormous fiscal cost, the relief does not arrive until this second stage is complete, meaning that the earliest anyone should expect the country's energy import bill to meaningfully ease is approximately five months after the guns stop. However, this gets prolonged if the war continues for a meaningful length of time. 

Fertilizer is a partial exception to this sequence, and it is worth dwelling on because its implications for food security are both more immediate and more lagged than they might appear. Bulk cargo vessels can resume Hormuz transits somewhat faster than tankers, because the insurance and operational calculus for a fertilizer ship is slightly different from that of a crude oil carrier, which means that fertilizer supply to Bangladesh can begin recovering approximately one month after Hormuz normalises rather than two. 

The cruelty of the crop cycle, however, is that restoring fertilizer supply does not immediately restore food supply. The grain that feeds Bangladesh in the second half of 2026 depends on inputs that should have been applied in the first half of the year, and if those inputs arrived late or in insufficient quantity because of the supply disruption, the harvest will be smaller regardless of when the war ends. 

The food supply normalisation therefore lags the fertilizer supply restoration by approximately four months, which means that even in the most optimistic scenario, the food security stress that began with the conflict will not fully resolve until well into the second half of the year.

The FOREX Chain and why it matters

The foreign exchange position of Bangladesh is the linchpin of the entire investment thesis, because foreign institutional investors will not commit capital to a market whose currency is depreciating unpredictably, regardless of how attractive the underlying valuations appear on a price-to-earnings or price-to-book basis. The taka's stability depends on the current account, the current account depends on the energy import bill, and the energy import bill depends on oil prices, which depend on Hormuz. 

Following this chain to its logical conclusion, forex stabilisation arrives approximately two months after oil prices normalise, which is itself two months after Hormuz normalises, which is three months after a ceasefire, meaning that the earliest date for a genuinely stable taka is approximately seven months from the day the conflict ends. 

Foreign institutional investors are not waiting for Bangladesh to be perfect. They are waiting for Bangladesh to be stable, and stability has a specific meaning in this context: a taka that has found its floor, an inflation trajectory that is visibly declining rather than uncertain, and a current account that is no longer being bled by spot energy purchases at crisis prices.

Export normalisation runs on a parallel track. The ready-made garment sector, which earns the majority of Bangladesh's export revenues, depends on reliable and affordable shipping, and shipping costs are directly linked to fuel prices and route risk premiums. As oil normalises, so does the cost of moving containers from Chittagong to Rotterdam or Los Angeles, and buyers who had been cautiously reducing their Bangladesh exposure or shifting orders to Vietnam and Cambodia begin returning approximately two months after oil prices stabilise. 

Inflation, which is the last of the macro variables to respond because it reflects the cumulative pass-through of energy and import costs into the domestic price level, begins its descent approximately three months after the forex floor is established, as the taka's stabilisation prevents further imported inflation and the gradual easing of supply chain pressures works its way through to consumer prices.

Gulf hiring and the remittance economy

Bangladesh's remittance inflows have been running at record levels during the conflict, which seems paradoxical until one understands the mechanism: dollar strength against the taka has created a powerful incentive for expatriate workers to send money home through formal channels rather than the informal networks that historically captured a significant share of the flow. 

This war-driven remittance premium is not a structural gain and will moderate as the conflict ends and the currency effect reverses. What matters for the medium-term sustainability of the remittance economy is whether Gulf Cooperation Council (GCC) economies resume normal hiring after the conflict, and that depends on how much infrastructure damage those economies sustained and how quickly they can restart the construction and services projects that employ Bangladeshi workers. 

In a scenario where the conflict ends without catastrophic GCC infrastructure damage, Gulf hiring resumes approximately three months after Hormuz clears, and remittance flows stabilise on a structurally sound rather than conflict-inflated basis approximately two months after that.

So, when do the investors finally come?

Foreign institutional investors are not waiting for Bangladesh to be perfect. They are waiting for Bangladesh to be stable, and stability has a specific meaning in this context: a taka that has found its floor, an inflation trajectory that is visibly declining rather than uncertain, and a current account that is no longer being bled by spot energy purchases at crisis prices. 

When those three conditions are simultaneously visible in the data, the allocation desks in Singapore and London begin opening their Bangladesh country limits, not all at once and not without caution, but with the kind of systematic intent that produces a sustained re-rating rather than a brief rally that is sold into by trapped domestic investors.

The arithmetic of this sequence, modelled across five possible war-end dates from April 2026 to December 2026, produces a range of re-rating windows that runs from the fourth quarter of 2026 in the most optimistic case to sometime in 2027 or beyond in the scenarios where the conflict drags through the second half of the year. 

Every additional month of conflict pushes the re-rating approximately six weeks further into the future, because each link in the transmission chain has a minimum duration that cannot be compressed by policy action or investor enthusiasm. The mine clearance teams do not work faster because fund managers in Singapore are impatient.

What this framework reveals, and what most commentary on the DSE misses, is that the re-rating is not primarily a story about corporate governance, or regulatory reform, or the quality of individual companies' management teams, though all of those things matter. It is driven by a geopolitical event whose timing is determined in Tehran and Washington and Tel Aviv, not in Dhaka or Motijheel.

The investors who understand this sequence, who have mapped the transmission mechanism from ceasefire to Hormuz reopening to oil price to forex to inflation to foreign flows, and who have positioned themselves in the governance-credible, liquidity-adequate names that will serve as the landing pad for that capital, are not gambling on an unknowable outcome. 

They are waiting, with a calibrated and documented thesis, for a process that has already begun. The question they are answering every morning is not whether the re-rating will happen but whether the war will end in April or May or June, and what each of those answers means for the precise quarter in which the valuation gap closes.

So that is the model I have built. And the model, at this moment in April 2026, says that the clock is ticking and the sequence is clear, even if the starting gun has not yet been fired for the final time. 

Sketch: TBS

Sajid Amit, PhD, is a leading practitioner in international development with previous work experience at Morgan Stanley and BRAC EPL. He is a graduate of Columbia University and Dartmouth College and has received awards from KPMG, BlackRock and Morgan Stanley. 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.