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The equity market index tumbled on Sunday as investors were rattled by the global crisis that ensued after the US-Israel strike on Iran killed the country's Supreme Leader Ayatollah Ali Khamenei and other top security officers.
According to market analysts, stocks suffered a major setback amid escalating geopolitical tensions in the Middle East. Jittery investors dumped their holdings, fearing further erosion of their assets' value.
Economists and market insiders warn that if the conflict prolongs, it could result in longer shipping routes, higher freight costs, rising energy prices, and ultimately higher production costs across sectors.
The strikes on Iran put nearby oil-producing Gulf Arab countries on edge, as fears of escalation grew with Iran responding by launching missiles toward Israel and US military bases across the Middle East.
Bangladesh's energy security remains heavily dependent on Middle Eastern suppliers - crude oil from Saudi Arabia and the United Arab Emirates, and liquefied natural gas (LNG) from Qatar - making the country acutely vulnerable to disruptions in the Gulf.
Iran has reportedly closed the Strait of Hormuz in response to the attack. Nearly 90 per cent of Bangladesh's primary energy imports pass through this vital waterway.
Against this backdrop, the broad index of the Dhaka Stock Exchange (DSE) opened on Sunday with a steep decline from the previous session. It shed more than 200 points at the outset under aggressive selling pressure but later recovered partially.
The DSEX, the prime index of the DSE, ultimately fell 138 points, or 2.47 per cent, to 5,462.
The market had already been badly battered by the consequences of the Russia-Ukraine war. "So, investors were worried that another war may further deteriorate the situation," said Salim Afzal Shawon, head of research at BRAC EPL Stock Brokerage.
However, Shawon noted that the market plunge was largely a psychological reaction to the war. In the later part of the session, sensible investors stepped in, helping the market recover part of the initial losses.
"The main concern is disruption of global supply chains that may drive up oil prices," he added.
Meanwhile, Brent crude jumped 10 per cent to about $80 a barrel over the counter on Sunday, while analysts predicted that prices could climb as high as $100, according to Reuters.
While oil prices rise amid instability in the Middle East and key sea routes such as the Strait of Hormuz become insecure, Bangladesh faces multiple economic stresses.
"The ongoing conflict could drive up the cost of doing business," said Md. Sajedul Islam, managing director at Shyamol Equity Management. "This [Iran war] is definitely going to have an impact on energy prices and potentially on inflation as well."
The intensifying Iran-Israel war has created ripples across the globe, affecting economies far removed from the battle zones, and Bangladesh is no exception.
Global media reports suggest that world energy markets face one of their gravest shocks in decades, as the US and Israeli strikes on Iran, and Tehran's retaliatory missile attacks across the Gulf, disrupt oil exports from the world's most important producing region.
Oil prices had already been climbing for weeks amid rising geopolitical tensions. On Friday, crude prices rose by more than 2 per cent to $67 a barrel as markets reacted to the growing likelihood of military action following inconclusive talks between Iran and the US in Switzerland.
Further escalation could push prices even higher in the coming days.
Bangladeshi businesses have already expressed deep concerns, saying the intensifying war may pose fresh challenges. Former BGMEA President Faruque Hassan told the FE on Saturday that the conflict would have multiple impacts on international trade, as most of Bangladesh's air routes had been shut.
Higher oil prices would directly inflate Bangladesh's import bills, placing renewed pressure on foreign exchange reserves. An increase in LNG and fuel oil prices would raise electricity generation costs, potentially affecting industrial output and export competitiveness, particularly in energy-intensive sectors. There is also a risk of renewed inflationary pressure if transport and production costs climb in response to rising fuel prices.
However, Shawon expects that the conflict may be resolved within three to five days, given that Iran's top leaders were killed.
On Sunday, investor participation remained low as total turnover fell to Tk 7.76 billion, 18 per cent lower than the previous session.
Losers strongly outnumbered gainers on the DSE trading floor. Of the 389 issues traded, 353 saw price declines, 30 ended higher, and 6 remained unchanged.
Price declines in blue-chip stocks - BRAC Bank, Islami Bank, Square Pharma, Walton, and BAT Bangladesh - largely dragged the market down. They jointly accounted for a 46-point drop in the key index.
The blue-chip DS30 index, representing 30 prominent companies, also plunged 52 points to 2,117, as all blue-chip stocks except Fine Foods experienced price declines.
The port city bourse, Chittagong Stock Exchange, also fell, with its CSE All Share Price Index (CASPI) losing 246 points to 15,351 and the Selective Categories Index (CSCX) shedding 165 points to 9,422.
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