Ensure investment-friendly environment

The capital market reflects the overall efficiency of a country’s economy. It creates a coordination among the public, the government, and capitalists. In Bangladesh, the condition of the capital market has not been good for a long time. Political instability and certain influential figures have repeatedly been blamed for this. During the tenure of the previous government, many discussions were held and various plans were undertaken to stabilise the capital market; however, none of these plans ultimately became effective.

According to news published in the media on Thursday (May 8), it was reported that out of 393 shares and mutual funds traded on the country’s main stock exchange, the Dhaka Stock Exchange (DSE), prices of 381 decreased on Wednesday. As a result, the main index DSEX dropped by 149 points, or 3.02 percent, to 4,802 points. In terms of decline, this was the largest drop since July 23, 2013. The Chittagong Stock Exchange (CSE), the secondary stock market, also experienced a decline.

According to available information, some market-related individuals believe the ongoing conflict between India and Pakistan may have influenced the downturn. Pakistan’s stock market also saw a significant fall yesterday. While India’s market initially dropped, it eventually closed with a slight gain. No other global markets showed any negative impact. Due to various factors, including a persistent lack of confidence, Bangladesh’s market continues to spiral in a cycle of decline.

As soon as signs of conflict between India and Pakistan emerged, their impact began to be felt in Bangladesh’s retail markets as well. There are growing concerns over rising prices of many essential commodities. Following the recent mass uprising, investment in the country’s economy was already halted, and now, the fear of an India-Pakistan war is pushing investment further into stagnation. If this situation continues, the consequences could be dire. It is not enough to merely blame manipulation or global circumstances — a way out must be found.

Unless the country's overall economic activities are strengthened, the stock market will never recover. If in the coming days foreign currency reserves increase, GDP rises, and inflation declines, the capital market will likely move in a positive direction, as these factors influence the stock market. Effective government action is essential to ensure an investment-friendly environment. At the beginning of April, an investment summit was held with much grandeur and high hopes were expressed; however, two months have passed, and no tangible outcome is visible. Therefore, beyond rhetoric and public appeasement, meaningful and effective initiatives are urgently needed.