Analyzing Bangladesh's Stock Market Cycles: From Peaks to Drawdowns (2010-2024)

By Asif Khan, CFA

Chairman

EDGE AMC Limited

Posted on: 10 Apr, 2024

After the peak of 2010, the stock market in Bangladesh fell by around 60% before turning around. The next peak came in around 2017, after which the index fell around 40%. The latest peak was during the post-COVID liquidity frenzy of 2021. The drop in index values is summarized below

CASPI : -26%
DSEX : -25%
DS30: -30%

It is important to recognize that just because the market fell a certain % in a previous cycle it may not happen like that again. The period between 2010 to 2024 (Present) had a sideways market, unlike the up-trending market of 2000-2010. As a result, we saw boom and bust cycles more frequently.

It is also important to be cognizant of valuation levels. The significant drawdown after 2010 can be explained by the extremely high valuation levels. PE ratio was around 29x back then. In contrast, the 2017 peak had a PE ratio of 23x (still high but not as much as 2010). The latest peak of 2021 had a PE ratio of 21x.

The PE ratio chart is till the end of March 2024. Using April numbers would show something closer to 11x and bring it very close to the all-time low of 10x that we saw during the COVID-19 pandemic.

Note: The total return chart below uses the year-end numbers resulting in a smoother line.

Tags:
Bangladesh stock market, CASPI, DSEX, DS30, market cycles, investment analysis, PE ratio, stock market trends, economic outlook, financial markets, valuation levels, historical performance

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