The year 2024 was tough for stock investors, with the benchmark index of the Dhaka Stock Exchange (DSE) losing 16.5 per cent, the biggest annual fall in four years.
The outgoing year is an eventful year for the country's capital market as well, with changes in the leadership of the market regulator following the notable shift in the country's political environment in August.
After the fall of the Awami League-led government, those in the top positions of the Bangladesh Securities and Exchange Commission (BSEC) were replaced. Khondoker Rashed Maqsood, a former banker, became the new BSEC chairman.
The boards of the DSE and the Chittagong Stock Exchange (CSE) have also been restructured.
The new commission has been working to bring necessary reforms for sustainable development of the capital market so that it regains investor confidence, market analysts say.
The market watchdog took stricter actions against unscrupulous investors and brokers, compared to the previous commissions. It also downgraded more than 28 non-compliant companies to "Z" category at once and formed several probe committees to punish wrongdoers based on probe findings.
"The steps taken by the new commission are expected to show positive results in 2025," said Mohammad Rezaul Karim, executive director and spokesperson of the BSEC.
The beginning of 2024
The year gave a fresh start to the equity market when the floor price was withdrawn from most stocks in January after 18 months.
Following the lifting of the price restriction, large-cap companies experienced high liquidity flow, said Md. Ashequr Rahman, managing director of Midway Securities.
As a result, the average daily turnover rose 9.35 per cent year-on-year to Tk 6.32 billion in 2024.
But the market failed to sustain the upward trend due to the dollar crisis, macroeconomic worries and a rise in the yields of Treasury bonds.
Political change ushers in hope but it quickly diminishes
Investors saw a glimmer of hope after the August political changeover. The DSE index surged by 786 points, with market cap boosted by Tk 679 billion, in just four days from August 6.
Soon investors' enthusiasm faded as political uncertainties loomed again, said Mr Rahman. "But the [current] movement of the market is real as stocks are being traded at fair prices."
In a yearly review, EBL Securities said, "The capital market in 2024 navigated a challenging environment marked by political transitions, regulatory shifts and persistent economic uncertainties."
Throughout the year, Bangladesh scrambled to maintain healthy foreign currency reserves, bring down inflation and stem the devaluation of the local currency against the US dollar.
Investor sentiment mostly remained subdued due to uncertainties surrounding the market outlook amid economic and political tensions.
The market experienced slight recovery from time to time when opportunist investors opted to capitalize on oversold issues that they deemed lucrative following substantial correction.
The DSEX, the prime index of the DSE, tumbled 1,030 points or 16.5 per cent over the year to 5,216. The index moved between 4,898 and 6,178 in the year.
The index witnessed the highest fall since 2019, the year when the key index lost 17.32 per cent.
The DSE shed Tk 1.18 trillion in 2024 despite the listing of six new companies.
IPO flow squeezed
Fund raising from the primary market through initial public offerings (IPOs) remained low this year; no new company got IPO approval in the outgoing year.
Six companies that received regulatory approval of their IPO proposals the year before collected Tk 6.55 billion in 2024.
The lack of IPOs drove away many investors from the equity market.
As a result, the number of beneficiary owners' accounts dropped more than 5 per cent to 1.66 million by Sunday, according to the Central Depository Bangladesh Ltd (CDBL).
Making the secondary market vibrant is imperative to draw new companies through IPO.
The new commission has already held meetings with several major local and multinational companies for listing.
All but the telecom sector endured losses this year. The engineering sector was the biggest loser in 2024, losing 47 per cent, followed by the power sector with a 34 per cent correction, the pharmaceutical 23 per cent, food 21 per cent and the banking sector 2 per cent.
The telecom sector gained 5 per cent as the sector heavyweight - Grameenphone -- gained 13 per cent alone during the year.
Lovello Ice-cream was the top annual gainer, soaring 154 per cent, while New Line Textile the worst loser, having shed 85 per cent.
Orion Infusion became the most traded stock in 2024, with a turnover value of Tk 35.98 billion, followed by Lovello Ice-cream, BRAC Bank, Grameenphone, and Alif Industries.
2025 outlook
The capital market is likely to continue to navigate a challenging climate in 2025 against the backdrop of ongoing political and economic uncertainties.
However, positive developments are expected on the macroeconomic front, such as rising flow of remittance and foreign funds, stable foreign exchange reserves, and progress in the disbursement of the IMF loan.
Moreover, the market may get some support in the coming year in the form of policy changes, said Salim Afzal Shawon, head of research at BRAC EPL Stockbrokerage, a top-tier brokerage firm.
"We believe the market would rebound with major policy changes," he said, adding that a solution to negative equity would be a strong catalyst in 2025 market performance.
There may be a cooling of political tensions in the latter half of the year if clouds over the next parliamentary elections get cleared.
The DSEX may hover around 5,000-5,800 points, while the average daily turnover is projected to remain subdued at around Tk 5 billion to Tk 7 billion, pertinent to improved money flow in the market, said EBL Securities.
Asia Frontier Capital (AFC), a pioneering global fund management firm, also predicted a bullish outlook for Bangladesh's stock market towards the second half of the next year following an economic turnaround.
Hong Kong-based AFC strongly believes the Asian frontier markets, including Bangladesh, have stepped into a positive economic cycle because of the important steps taken towards reforms.
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