Dhaka bourse shines in regional peer review, ranking second in H1 return

Infographics: TBS

The Bangladesh capital market has emerged as a front-runner among its regional peers, securing the second-highest returns in the first half of 2026.

Despite a backdrop of global geopolitical volatility and macroeconomic shifts, the Dhaka Stock Exchange (DSE) outperformed major markets such as Vietnam, Pakistan, India, and Indonesia.

According to a recent research report by BRAC EPL Stock Brokerage, the benchmark DSEX index delivered a robust 18.45% return between January and June, trailing only Thailand's SET Index, which led the region with a 26.32% gain.

The performance of the Dhaka bourse is particularly noteworthy when compared to other South Asian and emerging markets. While the DSEX surged, the Vietnam VNINDEX and Pakistan's KSE Index managed modest gains of 4.23% and 3.88%, respectively.

In contrast, several other major indices struggled significantly during the same period; Sri Lanka's CSEALL dipped by 1.60%, India's BSE SENSEX plummeted by 10.29%, and Indonesia's JCI saw a staggering 34.74% contraction. This divergence positions Bangladesh as a highly resilient market in a challenging global environment.

Beyond the headline index growth, the Bangladesh market remains significantly more lucrative for value-seeking investors in terms of valuation and yield. The report highlights that the price-to-earnings (P/E) ratio of the DSE stands at a modest 9.1, which is considerably lower than Thailand's 17.6, Vietnam's 15.3, and India's 21.6.

Furthermore, Bangladesh offers the highest dividend yield among its peers at 5.17%, surpassing Pakistan's 4.91% and Thailand's 4.23%, making it a preferred destination for income-oriented investors.

BRAC EPL Stock Brokerage noted that the strong recovery in the first half of 2026 was fueled by improved investor sentiment and a return to regulatory normalcy. The market navigated several high-impact developments, including post-election policy optimism, the fallout from Middle East tensions, and specific measures introduced in the FY27 national budget.

A major catalyst for growth was the appointment of a new commission at the Bangladesh Securities and Exchange Commission (BSEC) and the long-awaited removal of the last remaining floor prices on heavyweight stocks like Beximco Limited and Islami Bank, said the brokerage.

The DSEX crossed the 5,700-mark in late June for the first time in nearly 22 months, a milestone that reflects the deepening participation of both retail and institutional investors, it added.

Trading activity saw a material improvement during this period. The average daily turnover (ADTV) rose to Tk800 crore in the first half of 2026, a substantial leap from the Tk521 crore recorded in 2025 and the Tk383 crore seen in the first half of the previous year.

June 2026 marked a peak in activity, with a monthly ADTV of Tk1,206 crore, coinciding with an 8% monthly gain for the DSEX.

Sector-wise data shows that Cement, Services and Real Estate, Engineering, IT, and Textile sectors significantly outperformed the broad index.

Conversely, multinational companies and the top 10 large-cap scrips underperformed the DSEX, returning only 3.1% and 6.4% respectively, as investors shifted their focus toward mid-cap and momentum-driven stocks.

The first half of the year also saw the end of an era of price restrictions. By removing the floor prices on Beximco and Islami Bank, the BSEC paved the way for market-based price discovery. While this led to a sharp correction in some specific scrips, it was viewed as a necessary step for the broader health of the exchange.

However, the report mentioned that despite these improvements, market accessibility issues continue to be cited by global index provider MSCI, which made no major changes for Bangladesh securities in its May 2026 review.

In terms of individual scrip performance, the market witnessed some extraordinary rallies. Daffodil Computer emerged as the star performer of the half-year with a staggering 343.3% price surge, followed by Premier Leasing with a 325.9% gain. Other notable gainers included Meghna Pet, Sonargaon Textile, and Prime Finance, all of which saw their values more than triple.

On the liquidity front, City Bank, Dominage Steel, BRAC Bank, and Summit Alliance Port were the most sought-after stocks by volume and value.

On the flip side, the withdrawal of the floor price had a predictable impact on certain heavyweights. Beximco Limited was the top loser of the period, with its share price nosediving 73.4% as it searched for its natural market value. Other laggards included Rahima Food and several mutual funds, such as Reliance Insurance Mutual Fund and DBH First Mutual Fund, which saw corrections ranging from 27% to 39%.