News

Market recovery hinges on earnings, fund inflows
25 Oct 2026
Source: The Financial Express

Trading on the country's two bourses resumes today (Sunday) after a five-day Durga Puja holiday, but geopolitical tensions, economic uncertainty and disappointing corporate earnings have kept investors cautious despite relatively attractive share prices.

Investors have largely stayed on the sidelines in recent weeks, with many waiting for corporate earnings and dividend announcements before making fresh investment decisions. The prolonged uncertainty has dampened buying interest, leaving the market vulnerable to further pressure.


The cautious mood was reflected in last week's trading, as the benchmark DSEX of the Dhaka Stock Exchange (DSE) shed 1.4 points, or 0.03 per cent, to close at 5,451, down from 5,452 a week earlier. Average daily turnover plunged 17.9 per cent to Tk 3.9 billion, signalling subdued participation

Market insiders said investor sentiment remained fragile as the ongoing earnings season had failed to generate much optimism. Downgraded economic growth projections, renewed inflationary risks and concerns over remittance inflows have further clouded the outlook, while escalating geopolitical tensions pose additional risks.

"The potential escalation of conflicts involving Iran and other parts of the Middle East is a major risk, particularly because higher global oil prices could intensify Bangladesh's existing energy crisis," said Md Ashequr Rahman, managing director of Midway Securities.

However, he identified several factors that could support the market, including the resumption of initial public offerings (IPOs) after a prolonged hiatus, relatively low interest rates, an attractive market price-to-earnings (P/E) ratio of around 8.6 and the anticipated introduction of the T+1 settlement system, potentially in December.

"Once the IPO pipeline reopens, it will definitely be good for our equity market," he said.

Mr Rahman said interest rates remained relatively low despite a recent rise from 7.5 per cent to 8.5 per cent. Lower interest rates could encourage investors to move funds into equities, providing a boost to the market, he added.

These developments could gradually stimulate investment and improve trading activity, although persistent uncertainty may delay a recovery in buying interest.


"It's taking some time, as people are hesitant to invest amid all the uncertainties, but I believe the money will eventually come into the market," Mr Rahman said.

Despite adequate liquidity at stronger banks, sluggish private-sector credit growth suggests businesses remain reluctant to borrow and invest amid an unpredictable economic environment.

As a barometer of economic conditions and domestic and international developments, the capital market is likely to remain vulnerable to geopolitical tensions and mounting economic pressures, making a sustained recovery difficult, market participants said.

However, recent price corrections have created potentially attractive entry points for fresh investment, particularly in fundamentally strong companies whose shares have become cheaper.

Market insiders said bargain hunters could selectively accumulate stocks with sound fundamentals and short-term gain potential.

A sustained recovery, however, will require higher turnover, broader investor participation and stronger market confidence.

Geopolitical instability, inflationary risks, energy pressures and economic uncertainty are likely to remain the dominant influences on market direction, potentially limiting the impact of positive domestic developments until clearer signs of economic stability emerge.

Overall, the market is expected to remain cautious and stock-selective, with its direction depending on corporate disclosures, fresh fund inflows and a recovery in trading activity, market analysts said.

Over the past two weeks, investors have largely stayed on the sidelines, waiting to assess companies' financial results and dividend announcements before making fresh investment decisions.

Consequently, companies reporting stronger profit growth and attractive dividends are likely to attract greater investor interest.

 
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