Stocks jump to 18-month high after vote

The stock market finally found its smile.

Shares soared on the first trading day after the February 12 national election, lifting the main index to its strongest single-day gain in the past 18 months.

The benchmark DSEX climbed 200 points, or 3.7 percent, to 5,600. It marked the biggest daily jump since August 8, 2024, when investors cheered the prospect of sweeping reforms following the fall of the Awami League in a mass uprising.

This time, the trigger was different, but the mood felt familiar. Investors, sensing a political reset, rushed in.

Turnover, the total value of shares traded, surged 61 percent to Tk 1,275 crore. For the first time in five months, daily trading crossed Tk 1,000 crore. Of 394 traded stocks, 364 advanced while only 26 declined.

The message was somewhat clear. Confidence, at least for now, has returned.

Investors are betting that the BNP-led government, set to take office this week, will push ahead with reforms, strengthen oversight and perhaps bring some stronger companies to the market.

Market analysts point to the anticipation that foreign investors, who had earlier said they would return after a credible election, may now reconsider Bangladesh.

Hope is powerful in the stock market. When investors expect better days, they buy. When buying gathers pace, prices jump. That is precisely what unfolded.

During the tenure of the current interim government, reform efforts continued, yet the index swung between gains and losses over the past year and a half. Now, the election result has injected fresh optimism.

A closer look shows that yesterday’s rally was not evenly spread.

Islami Bank fell nearly 5 percent, topping the losers’ list. Ibn Sina also declined. Both firms are widely believed to have significant stakes held by leaders of Bangladesh Jamaat-e-Islami, whose electoral setback appeared to weigh on sentiment.

In contrast, several companies linked to BNP leaders surged close to the daily limit of 10 percent.

For instance, Dacca Dyeing, owned by BNP leader Giasuddin Quader Chowdhury, rose 9.94 percent despite struggling for nearly a decade.

National Bank, where BNP leader Abdul Awal Mintoo has ownership, climbed 9.7 percent. The bank sits in the “Z” category, a classification usually assigned to financially weak companies.

Dhaka Bank, linked to BNP Standing Committee member Mirza Abbas, also gained 9.6 percent.

At the Dhaka bourse, all major indices advanced yesterday. The DS30, which tracks blue-chip stocks, rose 86 points, or 4.18 percent, to 2,145. The DSES, which follows shariah-based firms, added 30 points, or 2.77 percent, to 1,127.

Notably, none of the top five gainers belonged to the “A” category, generally considered financially sound.

That leaves a question: are investors backing solid businesses, or simply placing bets on political proximity?

Market observers say a degree of optimism is natural after a change in government. Still, they caution against blind enthusiasm.

“If you buy a rotten apple, what will you do with that?” said Saiful Islam, president of the DSE Brokers Association (DBA).

Iftekhar Alam, president of the Bangladesh Merchant Bankers Association, said improved governance and recent legal reforms have lifted sentiment.

He expects more quality firms to enter the market through initial public offerings (IPO).

At the same time, he acknowledged the wider economy remains under strain. Inflation is high. Foreign exchange reserves are yet to stabilise fully. Several banks are still fragile.

That suggests the rally is built more on expectation than on hard economic evidence, he commented.

Other analysts share that view. Political transitions often spark short-term surges. Without stronger corporate performance, better governance and a steady economic recovery, gains can evaporate as quickly as they appear.

The upbeat mood extended beyond Dhaka. At the Chittagong Stock Exchange, the CASPI index climbed 484 points, or 3.2 percent, to 15,518.

DBA president Islam said investors have to be very mindful in the coming days, and they should not invest in rumour-based stocks.