The historical background of the Bangladesh share market is a rich tapestry woven with economic policies, political influences, regulatory frameworks, and global market trends. To encapsulate this journey comprehensively, let’s delve into its evolution, major milestones, challenges, and significant events, spanning from its inception to recent developments.
Bangladesh’s journey in capital markets traces back to the pre-independence period when it was part of British India. During this time, the region had limited exposure to formalized financial systems, with traditional money lending and informal trading dominating economic activities.
Following Bangladesh’s independence in 1971, efforts were initiated to establish a formal stock exchange. The Dhaka Stock Exchange (DSE) was founded on April 28, 1954, as the first stock exchange in the country. Initially, it operated as an over-the-counter exchange. However, its operations were halted during the liberation war.
After the liberation war, the DSE resumed operations in 1976 under the Securities and Exchange Ordinance. The Chittagong Stock Exchange (CSE) was established in 1995, broadening the scope of stock trading in the country. Despite these developments, the market faced numerous challenges, including:
- Limited investor awareness and education.
- Lack of regulatory framework.
- Absence of modern trading infrastructure.
- Political instability affecting investor confidence.
In the late 1990s and early 2000s, Bangladesh witnessed significant regulatory reforms aimed at enhancing market transparency, investor protection, and overall governance. The Securities and Exchange Commission (SEC) was established in 1993 as the regulatory body overseeing the country’s capital markets.
The early 2000s saw a surge in market activity, with the benchmark indices reaching record highs. This period, fueled by speculative trading and lax regulatory oversight, culminated in the infamous stock market crash of 2010. The crash eroded investor confidence and led to widespread reforms aimed at stabilizing the market.
In the aftermath of the 2010 crash, the Bangladesh government and regulatory authorities implemented a series of reforms to address systemic weaknesses and restore investor trust. These reforms included:
- Strengthening regulatory oversight and enforcement.
- Enhancing transparency and disclosure requirements for listed companies.
- Introducing risk management mechanisms and circuit breakers.
- Improving market infrastructure and technological capabilities.
Despite facing periodic challenges, including political unrest and global economic downturns, the Bangladesh stock market has shown resilience and continued to grow. Efforts to attract foreign investment and promote international integration have gained momentum, with initiatives such as the introduction of automated trading systems and the inclusion of Bangladeshi stocks in global indices.
In recent years, Bangladesh’s capital markets have witnessed a series of positive developments, including:
- Introduction of new financial products such as derivatives and exchange-traded funds (ETFs).
- Expansion of market outreach through investor education programs and technological innovations.
- Continued efforts to improve corporate governance standards and regulatory compliance.
- Embrace of sustainable finance principles and green investments.
Looking ahead, the Bangladesh stock market is poised for further growth and development, driven by ongoing reforms, infrastructure enhancements, and economic diversification efforts.
Despite progress in recent years, the Bangladesh stock market continues to face challenges such as inadequate market infrastructure, low investor awareness, and governance issues. Furthermore, external factors such as global economic uncertainty and geopolitical tensions can impact market sentiment and performance. However, the Bangladesh government remains committed to promoting capital market development through continued reforms, infrastructure investments, and investor education initiatives.
In conclusion, the historical trajectory of the Bangladesh share market reflects a journey marked by resilience, evolution, and adaptation to changing economic landscapes. From its humble beginnings to its current status as a vital component of the country’s financial ecosystem, the market’s history serves as a testament to the collective efforts of regulators, market participants, and stakeholders in fostering sustainable growth and development.
Source:-
Book: Investment Opportunity
Author: Hasan Kabir Jony
