Capital Market Reform Initiatives Fall Flat

Despite clear directives from Chief Adviser Professor Muhammad Yunus to revitalise the country’s capital market, progress remains stagnant as key reform initiatives stall and the longest IPO drought in years continues to sap investor confidence.

Following the fall of the fascist regime last year, the interim government prioritised reforms across several sectors, including the capital market.

In October 2024, a high-level task force was formed to stabilise the market, issuing 17 recommendations aimed at restoring investor confidence and ensuring structural reform. However, more than a year later, virtually none of the proposals have advanced.

Despite occasional regulatory efforts, the lack of new investment initiatives and company listings has further eroded confidence and undermined market stability.

According to market insiders, BSEC Chairman Khondoker Rashed Maqsood has prioritised regulatory reforms over investment initiatives. During his tenure, the commission has cancelled more than 13 pending IPOs but failed to attract a single new listing. The absence of any new company going public in the past 20 months has severely hampered market growth.

ANM Ataullah Naeem, President of the Bangladesh Capital Market Investors Alliance, said, “After the fall of the Hasina government, the banking sector’s paralysis spilled over into the capital market. Although the market initially recovered after the budget announcement, it has since slipped back into stagnation.”

He added, “If the interim government’s capital market initiatives had been implemented, investor confidence would have returned. Changing rules alone won’t help — we need new listings and new investments.”

Investor concerns deepened after the BSEC released the draft Mutual Fund Rules 2025, which many stakeholders fear could further destabilise the market. They warn that rather than promoting sustainable growth, the proposed rules could push the market to the brink of collapse.

A former president of the Bangladesh Merchant Bankers Association (BMBA), speaking on condition of anonymity, said mutual funds are the market’s lifeline. “Only mutual funds can help revive it now. But the proposed rules aim to halt new close-end fund approvals, potentially forcing existing funds into liquidation — a disastrous move,” he warned.

BSEC Chairman Khondoker Rashed Maqsood said the commission is working actively on reforming margin rules, mutual fund regulations, IPO policies, and corporate governance guidelines. “These reforms are logical and evidence-based,” he said, adding that all initiatives are expected to be completed within two months.

However, the numbers tell a grim story.

No New IPOs in Nearly Two Years

Since the current BSEC assumed office over a year ago, not a single IPO has been approved, virtually halting new industrial investment and expansion through market financing.

During the 2007–08 caretaker government, 26 companies — including Jamuna Oil, Meghna Petroleum, and Titas Gas — went public. In 2009, Grameenphone joined the market, becoming the country’s largest listed company.

Dhaka Stock Exchange (DSE) data shows that over the last five fiscal years, 52 companies raised Tk7,980 crore through IPOs — averaging Tk1,596 crore per year. However, in FY2024–25, not a single company was listed, marking the first such year in recent history. The last IPO was Techno Drugs on 7 March 2024.

Government’s Dithering Continues

Despite repeated pledges over the years, successive governments have failed to list profitable state-owned enterprises (SOEs).

Earlier this year, the chief adviser held a high-level meeting instructing authorities to offload government-held shares of multinational companies, encourage domestic firms to go public, and promote bond- and equity-based financing over bank loans. Yet, six months later, no directives have been implemented.

Plans to list 18 SOEs have also stalled. While the Finance Ministry discussed the issue in August 2025, progress remains minimal. Even some targeted entities, such as Jalalabad Gas and Sylhet Gas Fields Limited, confirmed receiving no instructions regarding listing.

Market Losing Momentum

As a result, the capital market continues to lose steam. The number of beneficiary owners’ (BO) accounts dropped from 1,690,511 in May 2025 to 1,643,035 in October — a fall of 47,476 in five months.

Market capitalisation has also declined. Between 12 and 16 October, the market lost Tk31,408 crore, while the DSEX index plunged from 5,778 points in August 2024 to around 5,061 points in October 2025 — a nearly 19% drop.

Expert Opinions

Abu Ahmed, Chairman of the Investment Corporation of Bangladesh (ICB), said, “If no new capital enters the market, it will dry up. Without new shares, investors lose interest, and the market keeps moving in circles.”

He noted that political uncertainty and security concerns continue to deter entrepreneurs from taking risks. “IPOs might return once stability is restored. With elections approaching, businesses are holding back,” he said.

Saiful Islam, President of the DSE Brokers Association of Bangladesh (DBA), added, “Reform measures have been ongoing for quite some time, but investor confidence has yet to translate into real results. Without new investments, the market cannot regain strength. Investors will benefit only if the BSEC completes its reform agenda.”