The equity market in Bangladesh suffered a significant setback on Wednesday, as escalating geopolitical tensions between neighbouring nuclear-armed India and Pakistan rattled investor confidence across South Asia.
The Dhaka Stock Exchange (DSE) saw its benchmark DSEX index plummet by 149 points — the steepest single-day drop since 29 October 2024 — closing at 4,802. This marks the index’s lowest level since 25 August 2020.
Market breadth was deeply negative, reflecting widespread investor anxiety. Out of the total traded issues, only nine advanced, while 385 declined and five remained unchanged.
Market analysts attributed the sharp fall primarily to fears surrounding the India–Pakistan conflict, which has intensified after India launched targeted military strikes against what it called terrorist infrastructure in Pakistan-administered territory.
The strikes came in response to a deadly attack last month in Indian Kashmir that killed 26 tourists — an incident India has linked to Pakistan-based militant groups. In turn, Pakistan condemned the strikes as a blatant act of war and warned of an appropriate response.
A managing director of a top brokerage house in Dhaka explained that the regional volatility had severely shaken investor sentiment.
Fears of geopolitical instability prompted many investors to liquidate their holdings, he said, adding that this external shock was the primary catalyst for Wednesday’s market plunge.
Further adding to the uncertainty was a rumour circulating within the market that the government was planning to remove the current chairman of the Bangladesh Securities and Exchange Commission (BSEC).
While this rumour contributed to negative sentiment, a morning letter from the Financial Institutions Division appeared to contradict the speculation. The letter confirmed that the BSEC chairman would be part of a high-level meeting scheduled for 11 May.
The meeting, to be chaired by the chief adviser and include the finance adviser, the Financial Institutions Division secretary, and the BSEC chairman, is expected to focus on strategies to revive the ailing capital market.
The managing director of the brokerage noted that the message may help restore some investor confidence, but Wednesday’s plunge was clearly driven by fears over the India–Pakistan conflict.
