Over 1.2 million investors have pulled out of Bangladesh's stock market in the past eight years, signalling a steep decline in market confidence.

According to data from the Dhaka Stock Exchange (DSE), the number of Beneficiary Owner (BO) accounts has decreased significantly, with the total falling from 2.92 million in 2016 to 1.67 million in 2024.

This drop represents a loss of 1.26 million investors over the past eight years.

In 2024 alone, the number of BO accounts decreased by over 90,000, from 1.75 million in 2023 to 1.67 million, indicating a continued trend of investor disengagement.

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Investors cite the stock market's volatility and instability as the primary reasons for their retreat.

Many have been left disillusioned after suffering significant losses, particularly those who fell victim to margin loans, which often led to forced sales and financial ruin.

Tariq Mahmud, a general investor, shared his concerns, saying, "Investors are losing money daily. The primary reason people invest in the stock market is for financial gain. However, continuous losses have led to a lack of trust."

Altaf Hossain, another investor, highlighted the role of margin loans in exacerbating the problem, "Many took out loans to invest, hoping for high returns. But as share prices plummeted, they became trapped in margin loans. As the value of shares, including those of medium- and low-quality companies, dropped, forced sales occurred, even for good shares, resulting in severe financial losses."

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Brokerage houses, once bustling with activity, now face a noticeable decline in business. The branch managers lament that there are no longer as many clients trading shares, and even expatriate investors, who once traded remotely via mobile phones, have pulled out of the market.

Asad Liton, branch manager at Global Securities Limited, noted the bleak situation: "No new investors are showing interest, and many are withdrawing their funds from the market. Even those making losses are taking out their investments. Those who are leaving with bitter experiences are unlikely to return."

If the Bangladesh Securities and Exchange Commission (BSEC) fails to address these issues, experts warn that the market could face a permanent downturn.

Mohammad Helal Uddin, an economist at Dhaka University and a member of BSEC's task force for market reforms, attributed the problem to a lack of investor confidence in the market.

He said, "Many BO accounts have become inactive, and some investors have withdrawn their funds, further diminishing trust in the market."

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There have also been concerns about the impact of the BSEC's crackdown on market manipulation. Last year, the commission imposed fines exceeding Tk 7.2 billion on individuals and institutions involved in share price manipulation.

Among the companies targeted was Beximco Limited, where the BSEC fined four individuals and five institutions a total of Tk 4.28 billion.

Professor Helal noted, "Most of the fines being imposed now stem from the previous commission’s tenure. They failed to address 98% of market manipulation cases, and it is now the current commission's responsibility to bring offenders to justice. Only then will market discipline be restored."

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An analysis of DSE's trading data reveals that not only has the number of BO accounts declined, but the DSE's main index has dropped by more than 1,000 points in the last year.

Besides, the market capitalisation of the Dhaka Stock Exchange has fallen by approximately Tk 1.15 trillion, further underscoring the challenges facing the country’s stock market.