Market slides over Trump-tariff-induced fear, experts see it as temporary hiccup

The stock market ended lower on Sunday as jittery investors reacted to the "reciprocal tariffs" imposed by the US administration.

That was the first trading day after a week-long Eid vacation. In the meantime, the US government imposed a higher import tariff, 37 per cent, on Bangladeshi goods as part of its taxing of all foreign goods in order to narrow trade deficits with exporting countries. At present, the US tariff on Bangladeshi items is about 15 per cent.

The additional tariff is feared to negatively impact many listed ready-made garment manufacturers and pharmaceutical companies, as they have substantial exports to the US.

Bangladesh holds a 9.0 per cent share of the US apparel import market. Nearly 24 per cent of Bangladesh's garment exports flow into the United States.

The market showed signs of pessimism right from the opening bell, losing 45 points within the first 10 minutes of trading. The textile sector saw the worst decline at the time.

However, the market managed to recover more than two-third of the early losses as buyers looked to capitalize on the undervalued blue chips as well as rebalance portfolios ahead of the end of the quarter.

DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), finally settled at 5,205, shedding 14 points or 0.26 per cent. It had gained nearly 5.0 points in the last session before the Eid vacation.

Turnover, a crucial indicator of the market, jumped to Tk 4.16 billion, up 32 per cent from the previous session.

On Sunday, the blue-chip DS30 index, a group of 30 prominent companies, gained more than 14 points to 1,929 as selective stocks saw price hikes.

Market analysts said they were expecting a reduction in the additional tariff as the Bangladesh government was working to negotiate a revised tariff with the US administration.

"There will be a little direct impact on the stock market," said Salim Afzal Shawon, head of research at BRAC EPL Stockbrokerage, a top-tier brokerage firm.

Mr Shawon is hopeful that the tariff will be reduced as the effective tariff rate on Bangladeshi products is yet to be finalized.

Bangladesh plans to increase imports of essential goods from the US to reduce its trade surplus with the country so that the US government revises down the 37 per cent tariff set to take effect on April 9.

The National Board of Revenue (NBR) is preparing a list of products currently imported from the US that could qualify for tariff reductions, particularly items where duty cuts would encourage higher imports without significantly harming Bangladesh's revenue.

Moreover, Bangladesh retains significant advantages that could be leveraged during negotiations, including substantially lower production costs compared to regional peers, such as China and Vietnam, both of whom have been hit with higher tariffs at 54 per cent and 46 per cent respectively, Mr Shawon explained.

The US is Bangladesh's single largest export destination. In 2024, the country shipped $7.4 billion worth of garments to America, making it the third-largest apparel supplier after China and Vietnam.

The punitive tariff is, however, less worrisome for the stock market as it already reached its bottom, said Mr Shawon, adding that Bangladesh's economic situation is improving with interest rates and inflation on the decline, and with remittance and exports growing.

Meanwhile, Finance Adviser Salehuddin Ahmed told journalists on Sunday that the government had taken an initiative to negotiate a new tariff with the US administration.

"We are hopeful that something good will come out of it," he said.

The Bangladesh government has also decided to send letters within the next 48 hours to US President Donald Trump and the US Trade Representative (USTR) to reconsider the tariffs.

On Sunday, stock market investors were mostly active in the pharmaceutical sector, which accounted for 22 per cent of the day's total turnover, followed by the textile sector, 11 per cent, and the banking sector, 9 per cent.

Most of the major sectors saw corrections. The textile sector endured the highest correction of 4.0 per cent, followed by non-bank financial institutions, food, engineering, banking, and telecommunication stocks.

Beximco Pharma was the most-traded stock with shares worth Tk 307 million changing hands, followed by Shinepukur Ceramics, Beach Hatchery, Bangladesh Shipping Corporation, and Square Pharma.

Beximco Pharma was also the day's top gainer, rising 9.78 per cent, while Beach Hatchery was the worst loser, shedding 9.27 per cent.

The Chittagong Stock Exchange (CSE) ended higher with the CSE All Share Price Index (CASPI) gaining 19 points to 14,560 while its Selective Categories Index (CSCX) rose 11 points to 8,854.

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