The Bangladesh equity market posted the steepest decline among global stock markets in September, as the benchmark index DSEX plunged 3.2 per cent, reflecting widespread profit-booking pressure and investor caution following a three-month recovery streak.

According to a report by EBL Securities, the DSEX dropped by 179 points to close the month at 5,416, while the blue-chip DS30 index slid 111 points to 2,082. The Shariah-based DSES index also declined by 55 points to 1,172.

In stark contrast, South Korea led global markets with a gain of over 10 per cent, followed by Taiwan at 9 per cent and Pakistan at 7.34 per cent. Apart from Bangladesh, the Philippines was the only other market to record a decline, albeit marginal at 0.30 per cent.

The Dhaka Stock Exchange initially showed promise in September, with the DSEX surpassing the 5,600 mark for the first time in nearly a year. However, the upward momentum quickly faded as sellers dominated the trading floor.

“Investors turned cautious amid volatile momentum in the absence of a reviving catalyst for the market,” EBL Securities noted in its monthly review.

Market participants largely adopted a wait-and-see approach, amid uncertainty over the earnings season and recent regulatory tightening aimed at reinforcing capital market discipline. The average daily turnover dropped by 6.3 per cent month-on-month to Tk 8.70 billion, highlighting weak investor participation.

While some selective stocks saw gains due to opportunistic buying driven by attractive valuations, the overall market sentiment remained subdued.

Despite the equity market’s weak performance, Bangladesh’s macroeconomic indicators have shown signs of recovery. The country continues to rebound from the economic challenges of the COVID-19 pandemic, the Russia-Ukraine war, and domestic political instability that culminated in a regime transition in August 2024.

Exports have picked up, remittance inflows rose to $2.7 billion in September — an 11.69 per cent year-on-year increase — and foreign exchange reserves have stabilized. The recent US tariff concessions are also expected to boost export performance further.

In its outlook, EBL Securities projects GDP growth at around 5 per cent for FY26, supported by improving fundamentals. The brokerage also anticipates a potential policy rate cut as government bond yields decline, which could provide a catalyst for market recovery in the coming months.

However, key risks remain, including political friction ahead of the national election, structural weaknesses in the banking sector, and tepid private sector investment.

“While macro indicators are gradually improving, investor confidence in the equity market will hinge on sustained policy support, political stability, and tangible improvements in corporate earnings,” EBL Securities concluded.