Stock investors in Bangladesh are apprehensive about the US hiking import tariffs, a move that could hurt the South Asian nation's exports and the profitability of export-oriented listed firms.

A 37 percent "discounted reciprocal tariff" was levied in response to White House estimates that a 74 percent tariff is effectively imposed by Bangladesh on American goods. Previously, Bangladeshi goods entered the US market by paying an average duty of 15.62 percent.

The rise in tariffs will negatively impact many listed readymade garment manufacturers and pharmaceutical companies as they export substantial volumes of goods to the US, said stock investor Mia Rubel Hossain.

"Either their exports will decline, or their profits will shrink -- or both. As a result, these companies may not be able to offer good dividends," he said.

Bangladesh's stock market has been struggling for several years due to the poor performance of listed firms, exacerbated by the Covid-19 pandemic and the Russia-Ukraine war. Additionally, recent political uncertainties have significantly impacted corporate profitability.

Most listed firms reported lower profits during the first half of the current fiscal year while many incurred losses. Now, many export-oriented companies listed on the stock market could sustain a further hit to their revenues due to the hike, which would subsequently affect stock market investors.

The question is whether such concerns are fair and the extent to which the rise in tariffs will impact the stock market.

Asif Khan, president of the CFA Society of Bangladesh, said there would be little direct impact.

There are 58 readymade garment and textile companies listed on the Dhaka Stock Exchange (DSE) that export goods alongside 34 pharmaceutical companies.

However, Khan said there are not many listed firms that export goods to the US, adding that those who do are not dependent solely on the destination.

"Many listed textile companies are not exporting to the US. Instead, they sell products to readymade garment companies, which then go for exports. Besides, a couple of pharmaceutical companies export goods to the US," he said.

However, Khan, also chairman of Edge Asset Management Ltd, added that the tariff hike may have an indirect impact on the stock market.

For instance, if the government now tries to reduce tariffs on products imported from the US, it will reduce revenue earnings, he said.

"This may prompt the government to raise taxes on other sectors or borrow from the banking sector. Borrowing from banks will create extra pressure on the liquidity of the financial sector," he said.

If there is a liquidity shortage and the interest rate of bonds rises further, it will impact the stock market, he explained.

Saiful Islam, president of the DSE Brokers Association of Bangladesh, said the immediate impact of the tariff hike on the stock market was low as there were many "ifs and buts".

If the government does not take proactive measures to tackle it by reducing duties on US products, it will have an impact, he said.

The impact on the stock market could manifest in two ways -- a reduction in exports and profits of export-oriented firms and a downturn in business opportunities in the financial sector, he said.

"If exports to the US decline, the financial sector's trade financing will also be affected. The government should take proactive steps to address the situation," he said.

As this is a "reciprocal tariff", he expressed hope that the government would consider reducing import duties on US products.

"Most of the goods Bangladesh imports from the US are not produced locally, nor is there any possibility of producing them here. So, the tariff can be reduced, which could help avoid a high tariff on our exports," he added.