Three days of gains are welcome, but the relief will fade unless the economy underneath gets stronger.
The stock market holds more than shares. It holds a schoolteacher’s savings, an entrepreneur’s next five years, the prospects of listed companies and, underneath all of it, the public’s belief that tomorrow will be better than today. When that belief cracks, indices drop. When a little hope shows up, the market leans towards it. Bangladesh’s capital market is leaning right now.
On 17 September, the Dhaka Stock Exchange’s DSEX index climbed 38.1 points to 5,532. Turnover rose 17.8 per cent from the previous session to nearly Tk 6.6 billion. Of the 395 companies and mutual funds that traded, 259 advanced and 78 declined. It was the third straight day of gains, and it suggests sentiment is shifting.
Stopping there would be a mistake, though.
How many points the index added today matters less than what is holding that rise up.
Relief, with unease attached
The past few years have been hard on the economy. Inflation has eaten into real incomes and shrunk what households can buy. Investment has weakened. Revenue collection remains low. Questions about the quality of bank assets have grown louder, and the effort to steady the foreign exchange market goes on.
The picture is not all dark. Remittances have picked up. The external sector has some breathing room, and the exchange rate regime has been adjusted. Together, these have eased a few of the most immediate pressures.
Still, a calmer external sector does not mean a healthy domestic economy.
Take a worker abroad who sends more money home. The family’s income rises, and the country’s supply of foreign currency grows. But if that money never turns into productive investment, if no new factory jobs appear and small entrepreneurs still can’t get credit, nothing lasting has been built.
So, the question for Bangladesh is no longer just how big the foreign exchange reserves are. It is whether domestic investment can start turning over again.
Recent international assessments give reason for caution too.
In its January 2026 Article IV assessment, the International Monetary Fund projected growth recovering to 4.7 per cent in FY26, with inflation staying near 8.9 per cent before easing to about 6 per cent in FY27.
By July, the tone had changed. The IMF warned that without enough reform to raise revenue and repair weaknesses in the banking sector, growth could slip to 3.5 per cent in FY27 and possibly below 3 per cent over the medium term.
The two forecasts don’t really contradict each other. They show how much any projection depends on the speed and seriousness of reform. Bangladesh’s economic future isn’t a number fixed in advance. Policy decides it.
What the banks reveal
No serious talk about the economy can skip the banks.
Bangladesh Bank data put the sector’s non-performing loan ratio at 34.6 per cent in June 2025 and 36.3 per cent in September. It fell to 30.6 per cent by December 2025, yet the total stock of bad loans still stood above Tk 5.572 trillion.
Those figures are more than lines in a ledger. They point to deeper trouble.
Banks work like the circulatory system of an economy. Savings flow in, credit flows out, entrepreneurs invest, factories go up, people get hired, output grows. Block the flow anywhere, and the effects travel through the whole body.
Bangladesh Bank’s latest Monetary Policy Review also flagged heavy strain on capital. It reported that the sector’s Capital to Risk-Weighted Assets Ratio, or CRAR, had fallen to negative 2.64 per cent in December 2025.
With numbers like that, rising bank share prices say little about whether the sector has recovered. What matters is whether balance sheets are getting cleaner, capital is being rebuilt, and lending discipline is coming back.
Markets often price in the future before it shows up in the real economy. A company with strong prospects for next year may see its shares rise today. That is why a recovery shouldn’t be waved away.
Still, market expectations and economic reality can’t stay apart forever. If corporate earnings stay flat, factories don’t expand, investment stays weak, consumers keep tightening their belts and healthy credit doesn’t return, liquidity alone will struggle to carry a rally for long.
The 17 September gain is a welcome sign of better sentiment. Calling it proof of full recovery would be premature.
The most dangerous word is rumour
Information asymmetry has long troubled Bangladesh’s capital market.
When a share price starts climbing, explanations flood social media. A big announcement is coming, says one post. A corporate decision is imminent, says another. Others simply point at the rising price and claim it will keep rising.
Ordinary investors are most exposed here. “The company must be good because the price is going up” is not an economic argument.
To judge a company’s real worth, an investor has to look at earnings, cash flow, debt, asset quality, management performance, dividend history and business prospects.
One of the costliest errors in the market isn’t necessarily buying the wrong share. It is treating someone else’s decision as your own research.
Right now, the most useful thing an investor can do is understand risk. Chasing returns comes second. Putting all your money in one share is risky. So is leaning too heavily on one sector. Spread your holdings, read the financial statements, trust disclosed information over rumours and know how long you plan to stay invested.
The same goes for margin loans. Borrowed money can magnify gains, but when the market turns, losses grow just as fast.
At this point, the market needs discipline more than excitement.
Any serious plan for the capital market’s long-term development has to put regulatory reform, banking reform and wider macroeconomic reform in the same conversation.
In June 2026, during talks on a new support programme for Bangladesh, the IMF named weak banks and low revenue collection as major challenges. Its July assessment was blunter, calling for effective restructuring of the banking sector, higher revenue, contained inflation and a stable foreign exchange market.
“Reform” sounds simple. Doing it is not.
Old problems in the banks have to be admitted. Weak institutions have to be named. Capital shortfalls need fixing, loan recovery needs to become a habit again and financial reporting has to get better. In the capital market, transparency, accountability and investor protection all need strengthening.
Confidence can’t be ordered into existence. It grows out of rules that stay the same from one year to the next.
Look beyond the index
Bangladesh’s economy stands at a crossroads. The external sector shows relief, but the domestic economy is still under pressure. Trading is picking up, the market has risen several sessions running and some investors are drifting back. Even so, weak banks, high inflation, thin investment and limited revenue collection all call for care.
Both things are true at once.
Scaring investors won’t fix a market. Neither will manufactured optimism.
A recovery will count only when corporate earnings improve, investment expands, output grows, banks get stronger and people trust the economy again.
So the question today isn’t whether the DSEX will gain 50 points tomorrow. It is whether the foundation under this recovery can carry the next five years.
An index is a number. Confidence is an economy. In the end, a capital market rests on confidence, not on numbers alone.
The writer is a capital market investor and a vice president at the Bangladesh-American Chamber of Commerce USA Inc
Views expressed are solely those of the author
