Bangladesh Equity Market Outlook: Low Valuations and Future Growth Potential Amid Political and Economic Uncertainty

By Asif Khan, CFA

Chairman

EDGE AMC Limited

Posted on: 02 Oct, 2024


Sometime back I wrote a post on how equity market valuations were at a historical low for Bangladesh. Low valuations aka how cheap the market is was calculated using a trailing 12 month price to earnings ratio for companies that account for around 50% of the market capitalization.

From that point the market actually rebounded and the PE ratio rose to 12x from the lows of 10x. After september quarter earnings come, the ratio can increase further due to earnings contraction caused by protests and political volatility between July to September.

Interest rates, although gradually coming down, are still near long term highs. Hence, stock valuations are somewhat unlikely to make any sharp upward movements in the near term.

On a slightly longer horizon however, equities can perform quite well. Within the next 6 to 12 months I expect inflation and interest rates to come down. The country may also start seeing some stability that has been missing. Cheap valuations coupled with better economic activity and lower interest rates would make the case for equities interesting. 

p.s. Link to the previous post.

Composite PE

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  • Bangladesh equity market, stock market valuations, price-to-earnings ratio, inflation impact, interest rates, political volatility, market rebound, investment outlook, economic stability, stock market trends

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