Politics, liquidity top investor worries as survey reveals cautious optimism for 2026 market

Political uncertainty and liquidity stress
have emerged as the biggest challenges facing Bangladesh's capital market in
2026, according to a comprehensive sentiment survey conducted by LankaBangla
Securities, highlighting a cautious yet hopeful outlook among investors and
market participants.
The survey was
conducted from 1 January 2026 to 25 February 2026, with 101 respondents from
diverse backgrounds participating.
The survey found
that nearly 40% of respondents identified political instability as the most
pressing concern for the year ahead, while liquidity crunch ranked as the
second major challenge, cited by 22.8% of participants.
Concerns over weak corporate governance,
declining foreign participation, and a lack of innovative financial products
also featured prominently, though to a lesser extent.
Despite these
concerns, the survey suggests that market participants are not entirely
pessimistic. A significant portion of respondents acknowledged the
effectiveness of regulatory policies in 2025, with 45.5% rating them as
effective and nearly 10% considering them highly effective.
However, a
sizeable group remained critical, indicating that confidence in regulatory
oversight is still evolving.
The policy,
regulatory, and tax environment was identified as the most influential factor
shaping the market in 2025, followed closely by financial sector health and
liquidity conditions. This underscores the central role of policy direction and
macroeconomic stability in determining market performance, particularly in a
period marked by global uncertainty and domestic economic pressures.
Political developments continue to dominate expectations for the future. More
than half of the respondents believe political stability will be the single
most important driver of market performance in 2026.
Foreign investor
participation remains a key concern, with political risks identified as the
primary deterrent. Weak governance in listed companies and fears of currency
depreciation were also cited as significant barriers, indicating that
structural reforms are needed to attract international capital.
In terms of market
outlook, investors appear moderately optimistic. Most respondents expect the
benchmark index to close between 5,500 and 6,500 by the end of 2026, while
daily turnover is projected to remain within a modest range, suggesting a
gradual recovery rather than a sharp rebound.
The banking sector
is expected to lead market growth, followed by pharmaceuticals and insurance,
the survey finds.
Investment
strategies are also shifting, with more than half of participants favouring
medium-term investments, reflecting a balanced approach amid ongoing
volatility. Equities are expected to outperform other asset classes, though
gold remains a strong alternative for risk-averse investors.
The survey also
highlights persistent structural challenges, particularly in the bond market,
where nearly half of the respondents expressed dissatisfaction with its
development. At the same time, most participants emphasised the need to
eliminate double taxation on dividends and reduce capital gains taxes to
stimulate investment.
Encouragingly,
over 60% of respondents believe that the integrity of Bangladesh's financial
markets will improve in 2026, although concerns over fraud, manipulation, and
weak enforcement remain significant. Calls for enhanced transparency, stricter
regulatory enforcement, and better corporate governance practices were
identified as critical to restoring trust.
















