The exodus of international capital from Bangladesh's premier bourse accelerated to an alarming pace in June, as foreign investors offloaded shares worth Tk358 crore – the largest monthly net sell-off so far this calendar year.

Despite recent attempts by the central bank to simplify tax repatriation procedures, global fund managers appear to be voting with their feet, driven by deep-seated concerns over regulatory interference and the shifting direction of the country's economic management, according to the stock market analysts.

Data from the Dhaka Stock Exchange (DSE) reveals a staggering imbalance in trade, with total foreign purchases amounting to a negligible Tk6 crore against the massive sell-volume, leaving the market's international participation at a historic low.

The June outflow almost doubled the Tk161 crore in foreign sales recorded in May and was nearly three times higher than the Tk124 crore seen in April.

This persistent retreat by overseas investors comes at a time when the market is struggling to find a stable footing, as the loss of institutional foreign support drains liquidity from high-quality, large-cap scrips.

According to the DSE, portfolio investment data show that while foreign funds maintain holdings in approximately 130 firms, they actively trimmed their stakes in 19 major companies during June, while showing marginal interest in only 15 others.

The brunt of the selling pressure was felt by the market's most prestigious blue-chip entities.

BRAC Bank, long a staple of international portfolios, witnessed the most significant exit, with foreign investors offloading shares valued at a massive Tk186 crore. This move saw their stake in the bank slide from 35.89% in May to 34.69% in June.

Telecommunications leader Grameenphone followed a similar path, recording Tk42 crore in foreign sales as its international holding dropped to a mere 0.33%.

Other defensive giants such as Square Pharmaceuticals, Marico Bangladesh, and Renata also faced heavy liquidations, with sell values reaching Tk35 crore, Tk23 crore, and Tk16 crore, respectively.

Even British American Tobacco (BAT) Bangladesh and Beximco Pharmaceuticals were not spared, seeing double-digit crore outflows as global funds recalibrated their exposure to the Bangladesh market.

In sharp contrast to the aggressive selling, the appetite for fresh investment remained remarkably thin.

While foreign investors increased their holdings in a handful of companies like Shasha Denims, ITC, and Premier Cement, the monetary value of these entries was insufficient to offset the broader exodus.

Shasha Denims attracted Tk1.24 crore in new foreign capital, while ITC and Premier Cement saw inflows of approximately Tk1.10 crore and Tk1 crore, respectively. Marginal increases were also noted in LafargeHolcim Bangladesh, IDLC Finance, and Jamuna Oil, though analysts described these as minor portfolio adjustments rather than a renewed vote of confidence in the market.

Market experts and industry leaders point to a growing disconnect between the regulator's intentions and investor perceptions.

Moniruzzaman, managing director of Prime Bank Securities and senior vice president of the DSE Brokers Association (DBA), provided a blunt assessment of the situation. He told The Business Standard that renowned global investment firms are increasingly dissatisfied with the performance and policy direction of the central bank.

He further said, "In particular, the way Governor Ahsan H Mansur was removed has raised concerns among foreign investors about the future direction of the country's economy."

He also criticised the Bangladesh Bank's recent directive requiring commercial banks to maintain paid-up capital of at least Tk2,000 crore to qualify for dividend declarations.

According to Moniruzzaman, the move effectively bypasses the globally recognised Basel III framework and penalises shareholders of otherwise healthy banks. Furthermore, the central bank's decision to cap the interest rate spread – the gap between deposit and lending rates – at a maximum of 4% is being viewed as a regressive step.

"This type of regulatory interference destroys the confidence of foreign investors," he observed. He warned that the central bank's current trajectory is moving the country toward what is known as a "command economy."

In such a system, the central government or regulator controls all major economic decisions, ignoring the fundamental market forces of supply and demand to dictate exactly what is produced and how it is priced.

For international fund managers who prioritise market-driven dynamics and transparency, the shift toward a command-style approach makes the Bangladesh equity market appear increasingly high-risk and unattractive.

The irony of the situation is that this massive sell-off occurred despite a landmark policy shift aimed at doing exactly the opposite.

On 20 May, the Bangladesh Bank issued a circular eliminating the long-standing requirement for an auditor's certificate for every single transaction made by non-resident investors.

Previously, foreign investors were forced to obtain a certificate from a chartered accountant for every trade to determine capital gains tax before funds could be reinvested or repatriated – a cumbersome process that caused significant delays and increased compliance costs.

Under the new rules, authorised dealer banks now handle the tax withholding directly from sale proceeds, allowing for immediate credit to Non-Resident Investor Taka Accounts (NITA).

State-owned and listed Eastern Lubricants Blenders PLC has partnered with the authorised Bangladeshi distributor of US-based Ergon transformer oil as part of its strategy to diversify into higher-value speciality products.

According to a price-sensitive information (PSI) disclosure today (11 July), Eastern Lubricant signed a one-year agreement on 9 July with Premier Petroleum Products & Lubricants Limited (PPPLL), Ergon's authorised distributor in Bangladesh.

Under the agreement, the two companies will jointly market, sell and distribute Ergon-brand transformer oil to government organisations across the country.
The company's share price rose 0.94% to Tk1,889 on the Dhaka Stock Exchange on Saturday.

Transformer oil is a specialised insulating and cooling oil used in electrical transformers to dissipate heat and provide electrical insulation, helping improve the safety, efficiency and lifespan of transformers. It is widely used in power generation, transmission and distribution systems.

The company said the partnership would enable it to supply internationally recognised transformer oil to government institutions, strengthen its position in Bangladesh's specialised lubricant market, and support its broader expansion strategy.

A subsidiary of the Bangladesh Petroleum Corporation (BPC), Eastern Lubricants is the country's only state-owned lubricant manufacturer, producing, blending, marketing and distributing automotive, industrial, marine and specialised lubricants.

The company has been seeking to diversify beyond conventional lubricants in recent years. Industry observers view the Ergon partnership as a significant step towards that goal.

Market analysts said demand for transformer oil is expected to grow steadily as Bangladesh expands its electricity transmission and distribution network. Major public utilities, including the Bangladesh Power Development Board, Power Grid Bangladesh PLC, Bangladesh Rural Electrification Board and power distribution companies, require transformer oil to operate and maintain electrical equipment. Securing supply contracts with these organisations could support the company's revenue and long-term growth.

The company, however, did not disclose the agreement's financial value, expected sales volume or potential impact on earnings.

Earnings rise, cash flow weakens

Easter Lubricant also reported stronger financial performance for the first nine months of the current fiscal year.Earnings per share (EPS) rose to Tk28.64 in the July 2025-March 2026 period from Tk17.28 (restated) a year earlier. For the January-March quarter alone, EPS increased to Tk15.61 from Tk6.62 (restated).

Net operating cash flow per share (NOCFPS), however, fell to Tk34.77 from Tk57.68, which the company attributed to higher accounts receivable and increased cash payments to suppliers for product purchases.

Meanwhile, net asset value (NAV) per share rose to Tk162.91 as of 31 March 2026 from Tk139.60 (restated) as of 30 June 2025.According to the company, higher base oil sales and increased non-operating income drove the improvement in earnings during the reporting period.

Bangladesh could see its trade with the European Union (EU) expand significantly over the next three to four years, but the country may not be fully prepared to capitalise on the opportunity, warned MA Razzaque, chairman of the Research and Policy Integration for Development (RAPID).

"Trade relations between Bangladesh and the EU are likely to deepen over the next three to four years in a way not seen over the past five decades. The question is whether Bangladesh has the capacity to absorb those opportunities," he said.

Razzaque was speaking at a seminar titled "The changing landscape of Bangladesh-EU trade relations: LDC graduation, preference erosion and intensifying competition", jointly organised by RAPID and the Friedrich-Ebert-Stiftung (FES) in Dhaka today.

He said Bangladesh has not been able to effectively present its own demands to the EU, even though the bloc has put forward extensive expectations on trade, governance and sustainability.

Referring to Bangladesh's graduation from the United Nations' least developed country (LDC) category, Razzaque said the Committee for Development Policy (CDP) had recommended a short deferment of the graduation process, which is currently scheduled for November this year.

"If the United Nations does not grant an extension, Bangladesh will graduate this year," he said.

Razzaque noted that Bangladesh currently exports around $22 billion worth of goods to the EU under duty-free access, making the bloc the country's largest export destination.

"Bangladesh definitely needs duty-free market access," he said, stressing that retaining preferential access to the EU market is crucial for sustaining the country's export competitiveness after LDC graduation.

He also highlighted the EU's broader economic contribution, saying around 30 percent of Bangladesh's foreign direct investment (FDI) originates from EU member states, while the bloc has provided about $3.4 billion in development assistance over the past five years.

Although Bangladesh does not enjoy duty-free access to the US market, Razzaque said the country still has scope to secure greater benefits from the EU market if it strengthens its competitiveness and preparedness.

"To remain competitive after LDC graduation, we will have to reduce our production costs," he said, adding that improving productivity and lowering business costs would be essential to maintaining Bangladesh's position in the EU market.

He added that the EU imports about 21 percent of its readymade garment products from Bangladesh under duty-free arrangements, while China's share of the EU apparel market has been declining, creating additional opportunities for Bangladeshi exporters.

The United States on Friday announced a major easing of export restrictions on the United Arab Emirates, removing barriers to sales of advanced AI chips and military items to the Gulf ally.

The Commerce Department said it would upgrade the UAE’s status under US export rules, a move that reflects the country’s designation as a major defense partner and its role in supporting American national security objectives, including in the war in Iran.

The department’s bureau of industry and security said it would remove the UAE from two restricted country groups, making it eligible for license-free exports of controlled military items, certain satellites and spacecraft, and dual-use goods used in oil and gas production, desalination and civil nuclear power.

The changes will also lift restrictions on support for the UAE’s drone programs.

The upgraded status “is warranted in light of the ongoing US-UAE military partnership and the UAE’s commitment to preventing the diversion and misuse of sensitive US technology,” the department said.

Separately, the department said it was approving the UAE government and certain companies to receive advanced computing items -- including AI chips and servers -- without export licenses.

This was part of a May 2025 cooperation agreement in which the UAE pledged to make matching investments in AI infrastructure in the United States.

The changes came as US tech giants and chipmakers look to expand their presence in the Gulf, where countries flush with oil and gas wealth have been investing heavily in artificial intelligence infrastructure.

The move drew sharp criticism from US Senator Elizabeth Warren, who accused the Trump administration of rewarding Emirati businesses with close financial ties to the president.

Warren, a senior Democrat on the powerful banking committee, said the arrangement was proceeding “despite reported concerns about the diversion of sensitive technology to China and other national security risks.”

The International Energy Agency said Friday that “a recovery” in global oil demand had started as supplies tentatively start moving through the strategic Strait of Hormuz again and prices ease.

“A recovery in world oil demand is underway, with consumption set to rise from its May nadir,” the IEA’s monthly report said.

The agency had in June predicted a fall in demand of 1.1 million barrels a day (mbd) through 2026 because of the Middle East war, which strangled traffic through the strait. It now expects a one million barrel a day fall.

“Global oil supply rebounded by a sharp 4.1 mbd to 98.8 mbd in June, as a resumption of flows through the Strait of Hormuz underpinned a partial recovery in Gulf production. World output was nevertheless some 9.4 mb/d below pre-war levels,” it said.

“Total Gulf oil exports, including volumes bypassing the Strait, surged by 6.5 mbd in June, to 16.1 mbd – a big jump but still well below the 24 mbd average before the war started.”

According to the IEA, world supply improved to 102.6 mbd in June and would continue to get better if there was “a swift de-escalation of renewed hostilities”.

“If transit volumes improve, oil supply will expand by 7.5 mbd next year,” the agency added.

The agency said world oil reserves increased for the first time since the US-Israeli attacks on Iran on February 28 set off the war.

It added that stocks in the richest nations had fallen as their oil imports remained low despite the rise in volumes being transported by sea.

While oil prices fell dramatically in June, fresh fighting between US and Iranian forces this week “clouds the outlook”, the IEA said.

“Renewed exchanges of fire in the Gulf this week highlight the risks of not reaching a lasting peace agreement, which is a must for the normalisation in oil markets,” it commented.

Shares of Daffodil Computers PLC have surged more than 308% over the past five months despite weak financial performance and the absence of any price-sensitive information (PSI), raising concerns over the stock's valuation and trading pattern.

According to data from the Dhaka Stock Exchange (DSE), the company's share price climbed from Tk41.80 on 8 February to Tk170.60 on 9 July, marking a 308.13% gain during the period.

Despite the steep rally, Daffodil Computers did not disclose any PSI that could explain the price movement. The DSE sought explanations from the company twice over the unusual rise in its share price. On both occasions, the company said it had no undisclosed price-sensitive information.

The company's financial performance also offers little support for the sharp appreciation.

According to its unaudited financial statements for the January-March quarter of 2026, Daffodil Computers reported revenue of Tk9.43 crore and a net profit of Tk23 lakh. Earnings per share (EPS) stood at Tk0.05, while net asset value (NAV) per share was Tk13.41. The company attributed the earnings decline to lower sales during the quarter.

Even so, sustained buying interest continued to push the stock higher, driving its price-to-earnings (P/E) ratio to 511.8 – one of the highest among companies listed on the country's capital market.

A P/E ratio above 500 means investors are paying more than Tk500 for every Tk1 of the company's earnings, a level that market analysts say is difficult to justify unless there are strong expectations of exceptional future profit growth.

The company had earlier announced plans to issue 32.69 million ordinary shares at Tk15 each to repay a loan from Creative International and sought shareholder approval through an extraordinary general meeting (EGM).

However, on 21 May this year, the Bangladesh Securities and Exchange Commission (BSEC) declined to approve the proposed Tk49.04 crore share issuance.

In recent months, both the BSEC and the DSE have voiced concerns over sharp price increases in fundamentally weak stocks. The regulator has instructed the stock exchanges to strengthen market surveillance and investigate unusual trading activity where share prices rise significantly without any apparent reason.

Market analysts said Daffodil Computers' price movement appears disconnected from its financial fundamentals. They argued that, in the absence of any significant business development or material disclosure, such an extraordinary rally warrants closer regulatory scrutiny and raises concerns about possible market manipulation.

They also questioned why no visible regulatory action has been taken so far, noting that only the regulator can explain the absence of enforcement if irregularities are found.

Analysts advised investors not to chase rapidly rising stocks without assessing a company's earnings, asset value, financial health and long-term business prospects, warning that investments in heavily overvalued shares carry a high risk of significant losses.

The Insurance Development and Regulatory Authority (IDRA) has won the top innovation award in the regulatory agency category at the Innovation Showcasing 2025-26 for its mobile app, Insuplaint, which digitises insurance complaint management and claims monitoring.

Finance Minister Amir Khosru Mahmud Chowdhury handed over the award to IDRA Chairman Mir Nadia Nivin at the programme organised by the Financial Institutions Division (FID) on July 6.

Launched on June 23, the app enables policyholders across the country to submit insurance claims and lodge complaints remotely without visiting the regulator's office. Users can also track the progress of claim settlements and complaint resolution through the mobile application.

The platform also allows IDRA to monitor whether insurance companies are resolving customer complaints and claims in a timely manner, strengthening regulatory oversight and improving service delivery.

As part of its broader digital transformation efforts, IDRA is also implementing Bima Tathya App, a centralised digital platform designed to verify insurance policy information. The platform is expected to simplify policy verification, prevent fake and duplicate policies, enhance public confidence in the insurance sector and support higher premium collection.

The Innovation Showcasing 2025-26 featured 25 innovation initiatives from agencies and organisations under the Financial Institutions Division. Five organisations received awards in five separate categories.

The other award-winning initiatives were Janata Bank's "Janata-Pay" under the state-owned commercial bank category, Probashi Kallyan Bank's "e-Migration Loan Service" under the specialised bank category, Bangladesh House Building Finance Corporation's automated deed return process under the financial institution category, and Palli Karma-Sahayak Foundation's GIS-based Supervision and Monitoring System under the other institutions category.

Small and medium enterprise owners in Dhanmondi and Mohammadpur have demanded key policy reforms, including extending trade license validity to five years, lowering real estate taxes, and easing import logistics - to mitigate the rising cost of doing business.

Local entrepreneurs raised concerns over domestic trade challenges and liquidity constraints at an exchange of views "Improving the Overall Local Business, Trade and Investment Environment" organised by the Dhaka Chamber of Commerce & Industry yesterday.
Dhaka Chamber President Taskeen Ahmed highlighted that administrative hurdles, ambiguous tax rules, energy shortages, and mandatory early shopping mall closures by 7pm are severely curbing sales turnover.

Praising Finance Act 2026 initiatives, he warned that high government bank borrowing risks crowding out private sector credit.

Jonayed Kabir Sohag, chief revenue officer of Dhaka South City Corporation, pledged zero tolerance against municipal service harassment.

Regarding security, Md Tareq Zubair, deputy commissioner (crime) at Dhaka Metropolitan Police, highlighted active drives against extortionists and ongoing AI-based traffic management expansion under a "Smart Policing, Smart City" initiative.

Tax officials noted supportive measures, including quarterly VAT returns to preserve working capital and extended tax exemptions for renewable power through 2035.

Participating entrepreneurs also urged policy support for digital marketing, tax cuts on real estate signing money, expedited container clearance at the Dhaka Inland Container Depot, and easier LC access for new ventures.

The event concluded with the chamber awarding membership certificates to 39 newly enrolled business establishments.

Bangladesh retained its position as the second-largest apparel supplier to the United States in the first five months of 2026, despite a dip in shipments, as American buyers continued to pivot away from China, official data showed.

According to the US Office of Textiles and Apparel (OTEXA), Bangladesh's garment exports to the US fell 8.1% year-on-year to $3.25 billion during the January-May period. However, the drop outperformed the overall US apparel import market, which contracted by 9.3%.

Vietnam extended its lead as the top supplier to the US, with exports rising 1.5% to $6.39 billion. Meanwhile, shipments from China plunged 42.8% to $2.80 billion, signaling an accelerating shift in global retail supply chains driven by US tariffs and diversification strategies. In volume terms, China's shipments sank nearly 30%.
Indonesia and Cambodia were among the biggest beneficiaries, recording growth of 5.5% and 14.9%, respectively, while India's shipments dropped 26.4%.Although Bangladesh maintained its market ranking, the figures indicate the country has yet to capture a significant share of the orders shifting away from China, with regional competitors expanding faster.The latest monthly data, however, showed a more encouraging sign. Bangladesh's exports to the US increased 6.0% in May from a year earlier, compared with a 2.8% rise in total US apparel imports, indicating demand may be recovering after a weak start to the year.In volume terms, Bangladesh shipped 1.09 billion square metre equivalents (SME) during the January-May period, down 6.2%, while its average unit price slipped 2% to $2.99 per SME, suggesting exporters largely maintained pricing amid softer demand.China suffered a dramatic collapse, both in value and volume. China saw nearly a 43% drop in value and nearly 30% in volume as the country continues to lose market share rapidly, largely because of US tariffs and sourcing diversification.

Indonesia rose as a big challenger as the country recorded 5.49% growth in value and over 13% in volume. While Cambodia emerged as the fastest-growing apparel exporter to the US as the country achieved nearly 15% in value growth and over 18% in volume growth.

Price comparison:

Bangladesh's garment export prices to the US market remained stable despite weaker demand, hinting exporters largely avoided deep discounting to retain orders.

The average unit price of Bangladesh-made apparel slipped 2% year-on-year to $2.99 per square metre equivalent (SME) during January-May 2026, compared with the global average of $3.14.

OTEXA data shows Bangladesh continued to command higher prices than China ($1.43), Pakistan ($2.59) and Cambodia ($2.91), but trailed Vietnam ($3.39), India ($3.41), Honduras ($3.64), Indonesia ($3.77) and Mexico ($4.45).

China recorded the lowest unit value among major suppliers, reflecting its focus on lower-priced, high-volume products, while Mexico maintained the highest average price, supported by its proximity to the US market and a greater share of value-added apparel. Bangladesh's relatively stable pricing indicates that the decline in exports was driven more by lower shipment volumes than by price erosion.

An inspection team from the Dhaka Stock Exchange (DSE) recently visited the factory premises of AFC Agro Biotech Limited only to find its production and operations completely shut down.

The premier bourse published this finding on its website on Thursday.

According to existing securities laws, listed companies are legally obligated to immediately inform their investors and the regulators if factory operations are suspended.

However, AFC Agro Biotech failed to provide any such material information to the stock exchange regarding its closure.

Following this production halt, the total number of non-operational listed firms on the DSE has risen to 34.

The agro-based bio-pharmaceuticals and bio-chemicals producer has been plagued by operational and financial delays. AFC Agro last published its financial statements for the 2021-22 fiscal year, during which its board recommended a meager 0.50% cash dividend.

For that fiscal year, its earnings per share (EPS) stood at Tk0.22, up from Tk0.15 in the previous year, while its net asset value per share (NAVPS) was recorded at Tk18.19 as of 30 June 2022. In the preceding 2020-21 fiscal year, the company paid a 0.50% cash dividend solely to general investors, excluding sponsor-directors.

Adding to the regulatory non-compliance, the company has also stopped submitting its mandatory monthly shareholding reports since March 2024. According to its last submitted report from February 2024, sponsor-directors hold a 27.84% stake, institutional investors own 34.11%, and general investors hold the remaining 38.05% of its 11.52 crore total shares.

The company's financial distress was evident earlier in 2020 when the Bangladesh Securities and Exchange Commission (BSEC) permitted AFC Agro to issue a Tk100 crore non-convertible zero-coupon bond to repay bank loans and secure working capital. However, BSEC sources revealed that the company completely failed to raise the funds due to a total lack of bond subscriptions.

Alarmingly, AFC Agro's sister concern, Active Fine Chemicals Limited, is facing an identical fate. A prior DSE investigation team found Active Fine's factory closed as well. Once celebrated as the country's pioneer local producer of active pharmaceutical ingredients (APIs) with immense potential for the booming drug sector, Active Fine Chemicals has been in a steady decline and has failed to publish any financial disclosures since March 2023.

The government has suspended spending on the purchase of all types of motor vehicles, watercraft and aircraft under both the development and operating budgets for the fiscal 2026-27 to ensure prudent use of limited public resources, bring inflation down to a tolerable level and maintain macroeconomic stability.

In a circular today (8 July), the Finance Division also announced that interest-free special loans for government employees to purchase vehicles will remain suspended.

The circular further states that all foreign travels funded by the government for training programmes, seminars, symposiums and workshops have been halted. However, officials may still travel abroad to pursue master's and PhD programmes under scholarships or fellowships offered by development partners, universities, institutions or foreign governments.

It also allows participation in overseas training programmes financed by foreign governments, institutions or development partners. The overseas components of mandatory foundation and essential training programmes may also be conducted at appropriate universities or institutions abroad.

The restrictions will apply to the operating and development budgets of all government ministries and agencies, autonomous bodies, state-owned enterprises, statutory organisations, public sector corporations, state-owned companies and financial institutions.

The circular also states that no funds allocated under lump-sum provisions in the operating budget may be spent during the current fiscal year.

Although purchases of all types of motor vehicles, watercraft and aircraft under the operating budget have been suspended, exceptions will be allowed for replacing vehicles that are more than 10 years old. Newly established government entities may also purchase vehicles with prior approval from the Finance Division.

It adds that except for ambulances and vehicles used for security purposes, all replacement or newly purchased SUVs and cars must be fully electric vehicles.

No new residential, non-residential or other buildings may be constructed using operating budget funds. However, projects that are at least 70% complete may be finished with the approval of the Finance Division.

The Division also barred spending from the operating budget on land acquisition.

The circular similarly prohibits vehicle purchases under the development budget, although projects approved before the issuance of this circular may be exempted from this restriction.

Land acquisition under the development budget will be permitted only after completing all legal formalities and obtaining approval from the Finance Division.

Funds reserved under the Planning Commission's "Special Development Assistance" allocation may be spent only with prior approval from the Finance Division.

For pre-shipment inspections (PSI) or factory acceptance tests (FAT) under both the operating and development budgets, overseas travel will be considered only for experts or technically certified officials where the products are highly specialised or where PSI is mandatory.

In such cases, the finance ministry has instructed agencies to give priority to testing through internationally recognised institutions.

For all other expenditures, the ministry directed government agencies to ensure the best use of public funds and achieve value for money.

Asked about the total allocation for the expenditure categories now subject to restrictions, and how much the government expects to save through these austerity measures, Mohammad Zakir Hossain, deputy secretary at the finance ministry and signatory to the circular, said he was unable to provide the figures immediately.

Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), told The Business Standard that the government's decision appeared to be a positive one in light of the current economic situation, marked by high inflation and weak revenue mobilisation.

She said the economy could not afford additional spending under the present circumstances and that there was no room for wasting even a single taka. Spending on unproductive sectors would only fuel inflation further, she said, stressing that public expenditure should instead be directed towards productive sectors to boost investment, employment and people's incomes.

"Although the government has announced an expansionary budget, it is also trying to exercise great caution in its spending. At the same time, it plans to implement a new pay structure for public sector employees at a substantial cost. In doing so, the government is having to make trade-offs in public spending to fulfil some of its political commitments," she added.

A high-level Bangladeshi delegation will travel to the United States next week to lobby 54 member-states of the UN Economic and Social Council (ECOSOC) for support to the country's request to defer its graduation from least- developed country (LDC) status by three years.Geographic Reference

The team, led by Commerce Minister Khandaker Abdul Muqtadir, is scheduled to leave Bangladesh on July 13 and return on July 19, officials said.

The delegation will also include ERD Secretary Shariar Kader Siddiky, Bangladesh's Permanent Representative to the United Nations, at least two private-sector business leaders and other government officials.

The Bangladesh delegation is scheduled to meet ECOSOC representatives at the UN headquarters in New York from July 15 to July 18, an official at the Economic Relations Division (ERD) said on Wednesday.

According to the ERD, the policy decision on LDC graduation rests with ECOSOC, acting on recommendations from the UN Committee for Development Policy (UNCDP), before being placed before the UN General Assembly for final approval.

"Our team will meet representatives of the 54 ECOSOC member countries at the UN headquarters. It will explain the reasons behind Bangladesh's request to defer its graduation," a commerce ministry official said.

An ECOSOC meeting is expected to be held on July 22, when Bangladesh's request could be considered. The council generally makes recommendations to the UNGA on requests for graduation deferrals.Economic Trend Analysis

Bangladesh formally requested the UNCDP several months ago to postpone its graduation from LDC status by three years.

The UNCDP is an expert subsidiary body of ECOSOC responsible for reviewing countries' eligibility for graduation from the LDC category.

The commerce ministry official said that although the timeline would become clearer after the ECOSOC meeting, the final decision would require approval by the UNGA.

Like Bangladesh, Nepal has also recently requested a three-year postponement of its graduation from LDC status.

Meanwhile, the government briefed foreign diplomats in Dhaka on July 2 in an effort to build international support for its request.

As the proposal will ultimately be placed before the UNGA, Bangladesh will need the backing of a majority of member states, the official added.

Government officials said Bangladesh's fate regarding the deferral request is likely to be decided at the UNGA session in September this year.

Although Bangladesh is scheduled to graduate from LDC status in November 2026, Dhaka has sought a three-year extension to better prepare for the transition in light of emerging domestic and global economic challenges.Time & Calendars

Citing external shocks, energy supply constraints, domestic political transition and other economic uncertainties, Bangladesh submitted its request to the UNCDP more than two months ago.

Another ERD official said that while ECOSOC's position would become clearer after its late-July meeting, the final decision would rest with the UNGA.

"Since Nepal has also sought a three-year deferral, the UN may adopt a common decision for both countries," he said.

Responding to Bangladesh's request, the UNCDP, in a letter dated June 1 to the ERD Secretary, expressed a positive view of the country's plea, although it did not specify any timeframe.

Earlier, the UNCDP recommended Bangladesh, Lao PDR and Nepal for graduation from LDC status in 2026.

The share price of Emerald Oil Industries surged by the maximum daily limit, jumping 9.62% on the Dhaka Stock Exchange (DSE) following the announcement that it is preparing to resume production at its factory, which has been shuttered for over two years.

Its factory remained shuttered down since 1 January 2024 due unavailability of gas. It also turned non-compliant as it stopped disclosing its quarterly and annual financials in January 2023.

It had published its half-yearly financials for FY23, and since then investors remained in the dark about the company.

In a disclosure today (8 July), in a bid to reverse its fortunes, Emerald Oil said its board authorised management to resume factory operations as well as repair and maintenance to return to operation."

"The company has also informed that as per decision of the management, it has already procured a new boiler machine, new transformer, electric power substation and the installation of these machines are under process."

"Moreover, the company is also repairing the refinery unit. The total amount of procurement and maintenance is worth Tk10 crore approximately," it said.

With the disclosure about resuming operation, driven by investor optimism, the stock jumped 9.62% to close at Tk26.20 apiece on the DSE.

Market data showed massive trading volume, with 7.62 lakh shares changing hands, generating a total turnover of Tk1.99 crore.

The prolonged operational freeze and reporting lapse led the DSE to downgrade Emerald Oil to the Z category on 2 December 2025, after operations had remained halted for over six consecutive months.

According to its financial data, it had made a profit of Tk6.60 crore in FY23, and paid a 10% cash dividend to its shareholders.

After a hiatus of four years, Emerald Oil had returned to full-fledged production thanks to fresh investment in January 2022 under new owners.

The investment, which came from Minori Bangladesh, a subsidiary of Japanese farming company Minori Co Limited, had brought hope among the shareholders, who are now hoping to get good returns from their investments.

With its signature product – the rice bran edible oil, branded as Spondon, Emerald Oil had been a profitable firm until 2016.

The following year, when a loan scam of its founder came to light, the company started losing business and operation was halted due to a shortage of working capital.

Facing corruption charges, the founder fled the country and it was the shareholders who suffered the effects of a share price drop.

The Bangladesh Securities and Exchange Commission (BSEC), as a part of its drive to resurrect the listed sick companies, in January 2021, dissolved the board and reconstructed it by appointing five independent directors.

As per the agreement, Minori Bangladesh owns 30% shares from the company's directors and sponsors.

Emerald Oil, incorporated in 2008, began production of its Spondon-branded rice bran oil in 2011 and entered the bourses in 2014.

The company raised Tk20 crore issuing two crore general shares at a face value of Tk10.

But, in a few years, it melted down both in its business and in the stock market as soon as the founder's loan scams unfolded.

Prime Minister Tarique Rahman has said the government will identify those responsible for the continued stock market downturn that caused losses to thousands of investors and bring them to justice.

The government is also determined to restore investor confidence through a fair investigation and trial of the irregularities and manipulations that happened during the Awami League regime, he said while responding to a question from Khulna-4 MP Sk Azizul Baree Helal during the budget session of the Jatiya Sangsad, with Speaker Hafiz Uddin Ahmad in the chair today (8 July).

Tarique said the Anti-Corruption Commission had already conducted investigations into allegations of capital market manipulation, leading to the identification of several suspects and the filing of cases against them.

Explaining the reasons behind the prolonged decline in the stock market during the Awami League's tenure, the prime minister said findings from experts, investor organisations and investigative agencies pointed to a range of structural weaknesses.

These include market manipulation, artificial inflation and suppression of share prices, irregularities in initial public offerings, bonds and other securities, weak regulatory oversight, poor corporate governance, lack of transparency in financial disclosures, limited participation by institutional investors, declining investor confidence, inconsistent policies and the absence of a capital market-friendly tax regime.

Tarique said the Bangladesh Securities and Exchange Commission has already imposed fines amounting to Tk1,497 crore on individuals and institutions found involved in market manipulation, irregularities and corruption.

He added that probe body reports had also been forwarded to the anti-graft commission for further legal action against those responsible.

The premier said a new securities and exchange commission has already been formed with the appointment of an experienced chairman and three commissioners. Following the formation, the long-standing floor price mechanism was withdrawn to improve market efficiency.

Tarique outlined a series of reform initiatives designed to deepen the capital market and make it more investor-friendly. These include facilitating the direct listing of profitable state-owned enterprises, multinational companies and fundamentally strong firms, encouraging small and medium-sized enterprises to raise funds from the market and introducing legal protection for whistleblowers who report market manipulation.

Replying to two separate questions on the defence, the premier said the government plans to spend nearly Tk86,000 crore over the next decade to modernise the Bangladesh Army as part of a broader initiative to strengthen national security.

The government also plans to significantly enhance the capabilities of the navy by acquiring modern frigates, corvettes, offshore patrol vessels and submarines, while fourth-generation multirole combat aircraft, attack helicopters, medium-range missile defence systems, anti-drone technology and electronic warfare systems will be procured for the air force.

Besides, a plan to develop a "Made in Bangladesh Defence Industry" through a national defence industrial policy has been taken, alongside the establishment of Defence Industrial Zones, he said.

Tarique said the implementation of these plans would enhance the army's overall combat capability. The programmes include acquiring new tanks and armoured fighting vehicles to improve ground warfare capability, alongside modern artillery rocket systems, anti-tank weapons, and short- and medium-range air defence systems to strengthen precision strike and air defence capabilities.

He also said that strategic and operational mobility will be improved by expanding the army's air assault capability, air transport capacity for troops and equipment, and riverine transport operations.

The IMF on Wednesday cut its 2026 growth projection for the world economy again, saying an AI boom has not fully offset the fallout from war in the Middle East.

Global economic growth is now estimated at 3.0 percent this year, the International Monetary Fund said, down from 3.1 percent in its April forecast. The estimate was made before fresh exchanges of fire between the United States and Iran in recent hours.

It is the second time this year that the fund has lowered its overall growth expectations. The latest estimate marks a cooling from the 2025 growth rate as well.

Global inflation meanwhile is anticipated to accelerate to 4.7 percent this year, a higher level than earlier projected. Still, the overall growth slowdown is modest, as momentum in artificial intelligence -- driven by demand -- partially offsets the effects of the war.

Global economic growth is now estimated at 3.0 percent this year, the International Monetary Fund said, down from 3.1 percent in its April forecast

The IMF said it expects global growth to pick up in 2027 to 3.4 percent.

Deniz Igan, division chief at the IMF’s research department, told AFP that its forecasts are “broadly unchanged” cumulatively for the next two years and described the bounceback as “a V-shaped recovery.”

The delayed recovery from war on Iran, longer disruptions and higher prices is part of the reason the world economy will take a bigger hit this year, she added.

The IMF flagged that fallout varies widely.

“Energy exporters outside the conflict zone benefit from favorable terms of trade, whereas economies plugged into the technology-led upturn experience stronger activity even if they are energy importers,” the fund said.

“In contrast, activity weakens for energy importers with limited participation in the technology value chain,” it added.

US-Israeli strikes targeting Iran since February 28 sparked Tehran’s retaliation in virtually blocking off the Strait of Hormuz, while plunging the Middle East into war.

As traffic stalled in the key waterway for energy transit, global oil prices soared -- weighing on economies.

Oil and gas shipments resumed as a temporary US-Iran deal paused hostilities, but temperatures are again rising.

Igan -- speaking before hostilities resumed, sparked by Iranian attacks on ships in the strait -- said she expected the normalization of traffic through the waterway by 2027.

- ‘Glaring differences’ -

Although the world economy has weathered the shock from the war so far better than feared, the IMF warned: “The global picture blurs glaring differences across countries.” Retail gasoline costs jumped by 30 percent in emerging Asia after the onset of war, and only by 15 percent in Latin America.

While the US economy is still set to expand 2.3 percent this year, growth in the Middle East and central Asia was downgraded by 1.2 percentage points to 0.7 percent.

The downgrade is “consistent with a longer closure of the Strait of Hormuz,” the IMF said, but it added that it expects a larger rebound in the future.

The euro area is set to grow 0.9 percent this year, also a downward revision. Growth in France is pegged at 0.6 percent -- 0.3 percentage points lower than earlier expected.

The world’s second biggest economy, China, saw its growth projection adjusted upwards slightly to 4.6 percent.

Yet, the effects of the war have not fully passed through, the IMF said.

The release of strategic reserves has provided some relief amid reduced energy flows, but there could still be weakness ahead.

The IMF also warned that the possibility of a “renewed Middle East conflict looms large and could extend commodity price volatility, further threaten supply chains, raise prices, and weigh on financial conditions.”

Trade fragmentation could accelerate too, risking higher prices.

Nonetheless, there were some bright spots, the IMF said.

There was a “positive surprise” from some economies key to the global technology supply chain, despite their exposure to disruptions from the war.

The top four net exporters of AI-related hardware -- Taiwan, South Korea, Thailand and Malaysia -- saw resilient growth.

Igan added that expectations of higher inflation this year merely mark a pause, “not a break from the disinflation trend.”

Umpteen differences of opinion between the Asian Development Bank and the Bangladeshi financial-sector regulatory agencies delay the launch of ADB-sponsored taka-denominated bonds for both local and global subscriptions, officials say.
The Manila-based lender plans to introduce the local-currency bonds first on the domestic market and later for overseas subscription.Bangladesh Investment GuideBack in December 2019, the ADB in a letter to the government first expressed interest in issuing both onshore and offshore taka bonds in and outside Bangladesh. Earlier, an ADB delegation, led by then ADB country director Manmohan Parkash, met then finance minister AHM Mustafa Kamal late November discussing the matter.

However, things didn't progress as expected.

In a latest bout, the ADB in May last year submitted its proposal to the Economic Relations Division (ERD) on the issuance of bonds. Later, the Economic Relations Division forwarded the proposal to the Finance Division, Bangladesh Securities and Exchange Commission (BSEC), the National Board of Revenue (NBR), Bangladesh Bank, and the Financial Institutions Division for their opinion.

The ERD later forwarded the regulatory bodies' opinion to the ADB in November last year seeking its response on the opinions. The ADB in the first week of May forwarded its response to the ERD.

A senior official at the Economic Relations Division told The Financial Express an inter-ministerial meeting was scheduled to be held on June 14 last with ERD secretary Shahriar Kader Siddiky in the chair to discuss the regulatory agencies' comments on ADB's proposal and the subsequent response from the Asian Bank.

The meeting was organised to discuss how to lessen the differences of opinion between the ADB and the government bodies on the lender's proposal. However, the meeting was later postponed.Economic Trend Analysis

Sources say in the proposal the ADB has sought an evergreen approval from the ministry of finance to undertake local-currency operations on a recurring basis as its bond issuances are linked to multiple projects that may require extended implementation periods.

However, Bangladeshi officials argue that the sale of BDT bonds on the international market can play a positive role in familiarising the country to investors and investing the proceeds within Bangladesh can help increase foreign-currency reserves. "Nonetheless, approval granted should have a defined time limit."

Also, the ADB has sought permission from the government to allow local investors or resident institutions to buy local-currency bond without prior approval from the regulator concerned.

However, the government agencies say resident institutions do not have a general authority to purchase bonds from a non-resident institution like the ADB. They say, it is essential for local investors/resident institutions to obtain approval from central bank to invest in ADB's bonds as it is identified as a capital account transaction.

In response, the ADB fears that the requirement to obtain prior approval before investing in ADB bonds "would effectively limit ADB's potential investor base".

The ADB also sought approval for exchange of bonds proceeds into other currencies which the government agencies find the basis for this request "not clear" as the funds are intended for investment in Bangladesh.Financial News Subscription

In response, the ADB says, the ability to freely exchange proceeds of its debt enables ADB to efficiently manage liquidity, meet debt service obligations, and allocate funding in support of development operations.

"For onshore bonds, ADB shall reserve the right to convert the bond proceeds. For offshore bonds, ADB will need to convert the USD proceeds into BDT in order to support loan operations in Bangladesh and thereafter convert BDT back into USD to redeem the offshore BDT-linked bond," said the lender.

Also, the ADB has sought confirmation of tax exemption to all investment income arising from its investments in Bangladesh and also interest payments by ADB on its local currency bonds.

The ADB also demands that its local-currency bonds be exempt from local-registration requirements as "this will limit ADB's Taka bond operations". The ADB also wants permission to use the word 'Bank' in its marketing material without having a domestic banking licence.

The regulatory bodies have opined that using the word 'bank' without a banking licence is not allowed in the Bank Company Act 1991.

Furthermore, the Bank seeks confirmation that all domestic institutional investors, including pension funds, provident funds, insurance companies and financial institutions, may invest in the local-currency bonds.Bangladesh Investment Guide

However, the financial-sector regulators say the pension funds, provident funds, insurance companies, banks and financial institutions are the main investors in government bills and bonds. "Therefore, raising fund from these investors by onshore bond and investing that fund in the government bill/bonds could be recognised redundant and not viable for market development."

However, the ADB says its bonds are "not meant to compete with local government bonds/bills. ADB bonds will only be issued on the back of ADB projects".

The sponsor also seeks confirmation that the local-currency bonds will be eligible instruments for reserve requirement purposes of commercial banks in Bangladesh.

In response, the regulatory bodies mention that according to the current policies, no bank, financial institution, or any other international organisation is allowed to participate in Central Bank Repo or Reverse Repo/Standing Lending Facility using any securities other than government securities which are the eligible instrument for statutory reserves.

"If bonds issued by the ADB were allowed for use in central bank Repo and Standing Lending Facilities and eligible instrument for statutory reserves, it could substitute the demand for government securities and impede the government's ability to finance its budget deficit, thus hinder government's debt-servicing and-fiscal planning," they say in their opinion.

"Granting ADB bonds this facility as an alternative instrument to government securities could have a negative impact on the government's debt management and fiscal policy," they add.

A senior ERD official says the differences have to be minimised between the two parties through discussions for a way forward.

Contacted Wednesday, ERD secretary Shahriar Kader Siddiky told The Financial Express that a special assistant to the Prime Minister is working on the local-currency- bond issue alongside different bodies under the Ministry of Finance.

"They can give an idea how it is advancing," he says, expressing his lack of knowledge about the progress on the matter.

Prime Minister Tarique Rahman on Wednesday unveiled a wide-ranging reform agenda to restore stability in the country’s stock market, rebuild investor confidence and bring to justice those responsible for market manipulation that left thousands of investors financially ruined.
Replying to a written question during the 21st sitting of the first budget session of the 13th Jatiya Sangsad, the prime minister said the government has a plan to identify all those responsible for the prolonged decline of the stock market and take legal action against them.

He said investigations into stock market scandals have already been conducted through the Anti-Corruption Commission (ACC), leading to the identification of several individuals and the filing of cases against them. Investigations are continuing to determine whether other individuals or institutions were involved.

The parliamentary sitting, chaired by Speaker Hafiz Uddin Ahmed, took up the question raised by lawmaker ABM Mosharraf Hossain on behalf of Khulna-4 MP SK Azizul Bari.

The prime minister said various experts, investors’ associations and investigative bodies had examined the reasons behind the persistent downturn of the capital market during the previous Bangladesh Awami League government.Stock Market Research

According to those findings, the principal causes included market manipulation and artificial price inflation or suppression, irregularities in initial public offerings (IPOs), bond issues and other securities, weak regulatory oversight, delayed enforcement actions, poor corporate governance, lack of transparency in financial reporting, limited participation by institutional investors, declining investor confidence, policy inconsistencies and the absence of an investor-friendly tax regime, he added.

He said the Bangladesh Securities and Exchange Commission (BSEC) has imposed fines amounting to Tk 14.97 billion on individuals and institutions involved in market manipulation, irregularities and corruption. Reports prepared by investigation committees identifying those responsible have also been forwarded to the ACC for further legal action.

The prime minister said the government is determined to restore stability in the capital market and strengthen investor confidence by promoting good governance, transparency, accountability, greater market depth through product diversification and wider investor education.

As part of that effort, he announced a series of priority programmes, saying that, “The government appointed a new BSEC chairman and three commissioners on June 4 to strengthen the regulator with experienced professionals. Soon after taking office, the new commission withdrew the long-standing floor price mechanism.”

The government will encourage profitable state-owned enterprises to list on the stock exchanges through direct share offloading, while creating opportunities for multinational corporations and other large-cap companies to do the same, the PM said.Investing

“It will also encourage fundamentally strong companies, including small and medium-sized enterprises (SMEs), to enter the capital market.”

“To curb market manipulation, legal protection and incentives will be introduced for whistleblowers reporting irregularities.”

“The government also plans to introduce a new policy for the enlistment of approved auditors and audit firms to strengthen the auditing of listed companies and market intermediaries.”

“Other initiatives include launching a Foreign Portfolio Investment (FPI) onboarding portal, reforming regulations in line with international standards, introducing a one-stop securities custodian service, reducing capital gains tax, abolishing double taxation on dividend income and digitalising the process of opening Beneficiary Owner (BO) accounts and repatriating investment capital.”

The government will amend securities laws to allow direct filing of cases before special capital market tribunals and establish both a Capital Market Reform Commission and a Special Investigation Commission to oversee reforms and investigate irregularities, the prime minister added.

The reform package also includes the use of blockchain technology to expand market infrastructure and investment products, the introduction of online and mobile-based BO account opening and trading through electronic Know Your Customer (e-KYC) services, investment-friendly tax reforms, banking and mobile financial services (MFS)-based BO account transactions, artificial intelligence-powered market surveillance, stronger corporate governance standards, enhanced investor protection measures, modernisation of securities laws and trading of government securities—including Treasury bonds, Treasury bills and government Sukuk—through the stock exchanges to broaden retail investor participation

Multilateral financial institutions have failed to address the economic fallout of geopolitical conflicts, leaving developing countries to bear billions of dollars in additional costs without adequate international support, said Rashed Al Mahmud Titumir, the prime minister’s adviser on finance and planning.

The global development finance system must adapt to a “new normal” of repeated geopolitical and economic shocks, he said at the launch of the Organisation for Economic Co-operation and Development (OECD)’s Multilateral Development Finance 2026 report yesterday, organised by the Centre for Policy Dialogue (CPD).

“Countries like Bangladesh, which are accountable to their citizens, cannot simply pass on higher global energy prices overnight,” Titumir added.

Referring to the recent Middle East conflict, he said Bangladesh had to absorb an additional $3.46 billion in energy costs until June as the government did not fully pass on higher global fuel prices to consumers.

“Imagine what an additional $3.46 billion means for a developing country,” he said.

“If we raise domestic energy prices immediately, inflation will rise further. If we keep prices stable, the government will have to bear higher subsidies.”

GLOBAL INSTITUTIONS NEED TO REBUILD TRUST

Titumir said international organisations had remained largely silent despite the pressure on import-dependent economies.

“I have not seen organisations such as the OECD, the IMF or others actively addressing this challenge,” he said. “This does not frustrate us, but it shows that multilateralism must reclaim its moral authority.”

He said discussions on development finance often focus on declining aid flows, but international financial institutions have failed to address the direct costs of geopolitical conflicts, including higher energy prices, freight charges and supply-chain disruptions.

Many low- and middle-income countries depend heavily on imported fuel and food and have limited capacity to absorb such shocks without affecting economic stability, he added.

“The recent Spring Meetings ended without any proposal for an automatic debt suspension mechanism during global crises,” Titumir said.

“I also saw no meaningful initiative from the OECD or other international organisations to create secure energy and food corridors, despite many developing countries being net food importers and heavily dependent on global supply chains.”

He said freight costs had also surged during recent conflicts, further increasing import bills for countries like Bangladesh, while the international response remained limited.

Titumir warned that multilateral institutions could lose credibility if they failed to respond to the challenges faced by developing countries.

“If they remain silent during times of crisis, how can they continue to earn the trust of people around the world?” he asked.

He called for reforms, including temporary debt relief measures and coordinated efforts to protect energy and food supply chains during conflicts.

The adviser also questioned whether current climate finance systems properly consider the vulnerability of recipient countries.

“We often discuss climate change, but is there a clear link between a country’s vulnerability and the amount of climate finance it receives? I do not think so,” he said.

He argued that countries most affected by climate risks should receive greater financial support. He also expressed concern over the slow progress in making the Loss and Damage Fund operational, saying developing countries were under pressure to pursue low-carbon growth while facing increasingly costly borrowing.

Titumir said multilateral development institutions should be held to the same accountability standards expected from national governments.

“Just as national governments must remain accountable to their citizens, multilateral development institutions must also be accountable to the countries and people they serve,” he said.

Referring to the OECD report, he said it should be viewed not only as a warning about declining aid flows but also as a call to rethink the global development finance system.

“The institutions that shape this system must also rethink how they operate,” he said.

“We need a multilateral development financing system that is more resilient, inclusive and better prepared to address the challenges of the twenty-first century, especially in a world where uncertainty has become the new normal.”

According to the OECD report, the multilateral development system has reached a critical turning point. Contributions from Development Assistance Committee members fell by more than 15 percent in 2024 and are projected to decline by 23 to 30 percent by 2027, signalling a prolonged downturn.

The report warned that the system’s dependence on a few major donors has increased its vulnerability. Eleven DAC members, accounting for about two-thirds of total contributions, announced aid cuts in 2025.

CPD Executive Director Fahmida Khatun moderated the event, which was attended by economists from South Asian countries.

Foreign portfolio investors (FPIs) are steadily pulling out funds from Bangladesh's equity market as they have been moving assets to developed markets amid persistent macroeconomic challenges stemming from geopolitical tensions.

Net investment by overseas investors in the 12 months to May this year stood at negative Tk 4.30 billion, meaning they sold more shares than they bought. Foreign investors purchased shares worth Tk 21.12 billion, while selling shares worth Tk 25.42 billion during the period, according to market data.

Market analysts said the sustained outflow reflects a cautious stance among foreign investors as uncertainty over global economic growth, geopolitical conflicts and relatively attractive returns in developed markets continue to weigh on investment decisions.

Md Akramul Alam, head of research at Royal Capital, said multiple factors, including persistent macroeconomic challenges and global factors, have driven the prolonged foreign fund outflow.

"The overall economic activity remained sluggish, while profitability of major listed companies, including multinational firms, stayed subdued due to high input costs," he said.

The private sector credit growth remained low at 4.98 per cent in May this year, reflecting weak business confidence and tighter lending conditions.

The prospect of a sharp recovery in private sector credit demand looked slim, and that discouraged fresh investments, said Mr Alam.

Moreover, the US-Israel war on Iran has already triggered volatility in global oil prices, raising concerns about inflation and broader economic spillovers in Bangladesh.

Inflation hovered around 9 per cent during the time, and analysts warned that price pressures may persist in the coming months due to continuing global uncertainties, supply disruptions and elevated import costs.

The trend is not unique to Bangladesh. Global fund managers withdrew a record US$137.36 billion from major Asian equity markets during the first half of 2026, marking the fastest six-month capital outflow from the region since at least 2010 after strong gains over the previous two years, according to international media reports.

The outflows reflect concerns over slowing global growth, geopolitical tensions across regions and volatile crude oil prices, reducing investors' appetite for frontier and emerging markets.

Countries including India, South Korea, Taiwan, Thailand, Indonesia, Malaysia, the Philippines and Vietnam have also witnessed foreign fund withdrawals, although the scale has varied across markets.

Analysts said one of the key drivers behind the shift is the relatively higher return available in the United States. Elevated US Treasury yields have encouraged many global investors to move funds into American government securities, which offer attractive returns with lower risk.

The strength of the US dollar has further reinforced the trend by making developed markets more attractive than emerging economies.

Mr Alam also pointed to a global transition in investment towards artificial intelligence-focused companies, reducing portfolio allocations to markets such as Bangladesh and India, which are perceived to be lagging in the AI-driven investment cycle.Economic Trend Analysis

"This trend could reverse once the AI trade, which appears to be in bubble territory, eventually cools off," he said.

Mir Ariful Islam, managing director and chief executive officer of Sandhani Asset Management, attributed the foreign fund outflow to weak investor confidence, a strong US dollar and instability in the financial sector.

When the local currency weakens, foreign investors incur losses as the value of their assets falls even when share prices remain unchanged.

Moreover, foreign investors typically seek a stable, predictable, and long-term policy environment to ensure the safety of their investments, he said.

The newly elected government has yet to present a clear economic roadmap, while the Middle East conflict has further increased global uncertainty.

"Foreign investors are likely to look for greater policy clarity and consistency before increasing their exposure to Bangladesh's equity market," Mr Islam told The FE over the phone.

When it comes to investing in stocks in Bangladesh, foreigners usually prefer multinational companies. Currently, they are not interested in putting their money into these companies either, owing to lower-than-expected earnings in recent quarters.

After a significant decline in annual profit in 2025, the aggregate profits of the 11 multinational companies fell 6 per cent year-on-year to Tk 12.20 billion in January-March this year, according to company disclosures.

BAT Bangladesh's profit nosedived to Tk 5.84 billion in 2025, the lowest since its listing, due to lower sales, higher excise duty, and one-off costs for its Dhaka factory closure.

The tobacco leader's first quarter profit also dropped 34 per cent year-on-year to Tk 2.10 billion through March this year.

As a result, BAT's foreign stake dropped from 3.73 per cent to 2.99 per cent between June last year and June this year.

Grameenphone, the largest stock in terms of market capitalisation, reported its lowest annual profit in 2025 in eight years. However, its first quarter profit grew 4.4 per cent through March this year.

In the meantime, foreign stakes in GP fell to 0.33 per cent in June this year from 0.98 per cent in June last year.

Among the local firms, Olympic Industries experienced a similar trend. Its foreign stake fell to 27.62 per cent in June this year from 34.2 per cent in June last year.

Despite persistent selling of foreign holdings, Mr Islam said the domestic stock market has remained resilient in recent months, supported by strong participation of local institutional and retail investors amid falling Treasury bond yields.

However, he said foreign investors are closely monitoring Bangladesh. "Portfolio investment may pick up again if macroeconomic indicators improve and geopolitical tensions ease."

The government has imposed a fresh round of austerity measures for the fiscal year 2026-27, restricting spending on new vehicles, buildings, land acquisition and most foreign travel to rein in public expenditure, curb inflation and preserve macroeconomic stability.

In a circular issued yesterday, the Finance Division directed all ministries, departments, autonomous bodies, state-owned enterprises, statutory organisations and public sector corporations to cut costs from both operating and development budgets.

The move comes as the government faces mounting challenges in maintaining public expenditure amid slower-than-expected revenue growth.

BORROWING OVERSHOOTS AMID REVENUE SHORTFALL

In the just-concluded fiscal year, government borrowing from the banking sector exceeded its initial target of Tk 104,000 crore.

Last month, the National Board of Revenue (NBR) said its total collection might reach Tk 415,000 crore in the 2025-26 financial year, falling Tk 88,000 crore short of its target.

The tax authority, which generates 86 percent of the country’s annual revenue, recorded 10 percent year-on-year growth to Tk 360,642 crore during the July-May period of the 2025-26 fiscal year.

For the current fiscal year, the government has set the NBR a revenue collection target of Tk 604,000 crore to help finance the Tk 938,000 crore budget.

Analysts have said achieving the target will be challenging given the current pace of revenue growth and the absence of reforms.

The economy is also grappling with high inflation, which averaged 8.68 percent in the 2025-26 fiscal year, subdued private investment and renewed global uncertainty caused by the US-Israel-Iran conflict. The BNP-led government, which was sworn in this February, first tightened public spending through a directive issued in March.

SPENDING FREEZE HITS PURCHASES, ALLOCATIONS

In its latest directive, issued yesterday, the Finance Division said all block allocations under the operating budget have been frozen, while the purchase of motor vehicles, vessels and aircraft has been suspended.

However, exceptions will be allowed for replacing government vehicles that are more than 10 years old and for newly established government institutions, subject to prior approval from the Finance Division.

Except for ambulances and security vehicles, all replacement or newly purchased government cars and jeeps must be fully electric.

The government has also suspended spending on the construction of new residential, non-residential and other government buildings.

Only projects where construction has reached at least 70 percent completion will be allowed to continue, subject to Finance Division approval.

The circular also suspended spending on land acquisition under the operating budget and discontinued interest-free loans for government employees to purchase private vehicles.

Under the Annual Development Programme (ADP), the government has also banned the purchase of vehicles for development projects. The restriction, however, will not apply to projects where vehicle procurement had already been approved before the circular was issued.

Land acquisition under development projects will require prior approval from the Finance Division after all legal and administrative formalities have been completed.

Similarly, any spending from the government’s reserved allocation for “development assistance for special needs” under the Planning Commission will require prior approval from the Finance Division.

The government has also significantly tightened rules governing overseas travel by public officials.

All government-funded foreign training programmes, seminars, symposiums and workshops have been suspended.

Officials will still be allowed to travel abroad for master’s and PhD programmes funded through scholarships or fellowships provided by foreign governments, universities or development partners.

Participation in overseas training programmes financed entirely by foreign governments, international organisations or development partners will also remain permissible.

The foreign component of mandatory and basic training programmes may continue if organised by appropriate overseas universities or institutions.

The circular also permits overseas travel for highly specialised inspections, such as Pre-shipment Inspection (PSI) and Factory Acceptance Tests (FAT), but only where the products are technically complex, or such inspections are mandatory.

In such cases, only relevant experts or technically certified officials may undertake the visits.