Every day, we count the points on the stock market. Maybe that’s the wrong habit. The more urgent question is simpler: where did investor confidence go?
Look at what happened on 10 September. The DSEX slipped 22.71 points to close at 5,515.17. Of 386 securities traded, 230 fell and only 103 gained. Turnover came in at Tk5.44 billion.
Those numbers aren’t just numbers. They’re a read on the market’s mood, and the mood is cautious. Sellers are in control, and nobody seems sure of anything. Long-term investors won’t put their money somewhere they don’t trust.
We tell people the usual things: don’t chase rumours, invest in fundamentally sound companies, think long term. Fine advice. But there’s a harder question we don’t ask often enough.
Is the market transparent enough to deserve that advice?
When a stock moves sharply for no visible reason, an investor wants to know why. Does everyone get the same information at the same time, or does someone always get there first? When something looks off, how long before anyone looks into it? And once they do, does the public ever see what came of it?
Confidence can’t survive on unanswered questions like these.
A regulator’s real power isn’t its ability to punish. It’s the belief, held by ordinary investors, that the rules will actually be enforced.
Whether manipulation occurred in any specific case is for investigators to determine. The deeper problem is what happens when people stop believing the rules apply evenly. A healthy market runs on a simple guarantee: nobody gets an unfair head start on information.
When a company’s disclosures look confusing, someone explains them quickly. When trading looks strange, someone investigates. When wrongdoing is found, something happens as a result.
That guarantee is the market’s most valuable asset, more valuable than any single stock on the board. Yet most conversations about our capital market obsess over the index and barely touch the cracks underneath it.
Why is the market still struggling, even with some good news?
Bangladesh’s economy is sending mixed signals right now. Remittances are climbing. Foreign exchange reserves have firmed up a little. Both are genuinely good developments.
But inflation hasn’t let go. Wages aren’t keeping pace with expenses. Businesses aren’t seeing costs come down. Borrowing is still expensive.
Given all that, why would an ordinary saver risk part of their income in stocks?
Telling people shares are “cheap” won’t change their minds. They need to feel the ground is stable, that the information they’re getting is real, and that the rules won’t bend for someone else.
Global pressure has piled on top of domestic uncertainty. Oil has climbed past $100 a barrel as the conflict in the Middle East drags on. Inflation in the United States hasn’t been tamed either, which leaves global interest rates hanging in the air.
For an economy that depends heavily on imports, expensive oil doesn’t stop at the energy sector. Transport costs climb. Production costs climb. Import bills grow. Eventually, all of it lands on consumers as higher prices.
You can’t look at the capital market in isolation from any of this.
The real question isn’t whether the market goes up or down tomorrow. It’s what condition it’s in when it opens.
Does the index climbing a few points make the market healthy? No. Does turnover crossing Tk7 billion bring confidence back? Also no.
Confidence returns when buying spreads across the market, when money flows into companies with real fundamentals, when abnormal trading becomes rarer, and when violations actually get punished in public view.
So tomorrow, three things matter more than the index itself. Does buying interest spread beyond a narrow group of stocks? Does turnover rise in a way that reflects genuine participation, not just churn? Does interest grow specifically in large, fundamentally strong companies?
If all three move together, that’s the beginning of a real recovery. If the index only climbs because a handful of stocks got pushed up, calling it a recovery would be dishonest.
The market needs reform, not another slogan
Strict enforcement, not another campaign, is what the market actually needs right now.
Strong companies should be brought to market. Hard calls need to be made about companies that have been weak for years. Financial reporting needs to become something people can trust. Disclosure standards need teeth. Investigations into strange trading activity need to move faster, and so do the decisions that come out of them.
More than anything, the market needs a culture where a rumour can’t move a company’s value more than its actual business can.
This isn’t just the regulator’s job. Exchanges, listed companies, auditors, merchant banks, brokers and investors all carry a share of the responsibility.
When the market comes under pressure, the temptation is always to find some short-term fix that pushes the index back up. That temptation usually backfires, and badly, over time.
The market has to be allowed to recover on its own footing. Investors need to be able to tell the difference between a company with real earnings and sound governance and one riding a wave of rumour.
A market where weak, struggling companies see their share prices spike for no real reason isn’t a healthy one, no matter what the index says.
We like to call the capital market a mirror of the economy. A mirror only shows the truth when it’s clean.
Bangladesh’s economy still has real potential. Remittances are rising, reserves have gained some ground and plenty of entrepreneurs are looking for a place to put their money. Turning that potential into a stronger market starts with one thing: making the market believable again.
Investors are tired of being told to “just accept the risk”. Risk and uncertainty aren’t the same thing.
Someone can accept losing money because a business underperforms. What’s much harder to accept is staying in a market where you can’t tell if the rules apply to you the same way they apply to everyone else, whether information reaches you on time, or whether wrongdoing ever actually gets punished.
That’s why the real test tomorrow isn’t the DSEX. The real test is whether the market behaves in a way that earns trust back.
Pushing an index up is easy. So is inflating turnover for a day. Rebuilding confidence is not easy, and hoping for a real recovery without doing that work is like trying to bring down a fever by cooling the thermometer instead of treating the patient.
What Bangladesh’s capital market needs isn’t a higher number on a screen. It needs integrity, transparency, accountability and a set of rules that actually apply to everyone the same way.
That’s what will decide where this market goes from here.
The writer is a capital market investor and vice president at the Bangladesh-American Chamber of Commerce USA Inc.
Views expressed are solely those of the author.
