The Dhaka Stock Exchange’s (DSE) SME board has collapsed, wiping out its prior fictitious gains, while the main market has been rebounding since the fall of the Sheikh Hasina-led government in August of last year.

Following Khondoker Rashed Maqsood’s appointment as chairman of the Bangladesh Securities and Exchange Commission (BSEC), market analysts claim investor trust in SME stocks plummeted over fears that the watchdog would step up its efforts to combat price manipulation.

Between August 5, 2024, and September 4, 2025, the SME board’s market capitalization shrank by Tk 13 billion to Tk 19.06 billion, while the DSE SME index plunged 526 points to 948. The sell-off was led by sharp corrections in little-known firms such as Yusuf Flour and Himadri, whose earlier rallies had no fundamental support.

“The decline in SME stocks was unavoidable, as their previous price increases were artificial and did not reflect the companies’ financial realities,” said Akramul Alam, head of research at Royal Capital.

Yusuf Flour reported a modest profit of Tk 8.62 million in FY24 and declared a 5% cash dividend, while Himadri posted Tk 8.99 million in profit and also offered a 5% return.

Himadri, which runs six potato cold storage facilities in northern Bangladesh, has seen its share price crash 59% to Tk 976 on the DSE since the political transition. In November 2023, it had soared to Tk 10,000, briefly becoming the most expensive equity security on the bourse, outpacing fundamentally strong companies.

The correction gathered pace after the regulator fined one individual and three firms Tk 17 million in July 2024 for manipulating Himadri shares between April and August 2023. Despite the steep fall, the stock remains highly overvalued, trading at a price-to-earnings (P/E) ratio of 285 as of Thursday.

Yusuf Flour followed a similar trajectory. Its share price had inexplicably surged to Tk 6,352 on June 30, 2024, before plunging 64% to Tk 2,000. Both companies, which had fueled the SME index’s earlier rally, have since dragged it down.

Observers noted that during the rise of these stocks, trading volumes and investor participation were minimal, raising red flags.

“The share price of Yusuf Flour Mills should never exceed that of blue-chip stocks on the main board,” Mr. Alam added.

Since assuming office, Chairman Maqsood has prioritized accountability and market sustainability, taking tough measures against manipulators. The BSEC has imposed heavy fines on firms and individuals implicated in anomalies under the previous commission, while also tightening surveillance.

Other SME stocks have also suffered heavy corrections: Agro Organica dropped 78%, Krishibid Feed 65%, Master Feed Agro 55%, Krishibid Seed 50%, and Apex Weaving 43%.

Launched on September 30, 2021, with six companies and a base index of 1,000, the SME board had once peaked at 2,244 points. Today, however, much of that growth has been wiped out.