DSEX to hit 10,000 by 2027 as Bangladesh economy ‘shifts gears’: Capital Alliance

The forecast is based on a combination of stronger corporate earnings, improving macroeconomic stability, monetary easing and a potential re-rating of the stock market.

Bangladesh’s benchmark DSEX index could reach the 10,000-point mark by the end of 2027 as the economy moves from stabilisation to recovery and eventually acceleration, according to Capital Alliance (CAL), a frontier-markets-focused investment bank.

In its recent published Bangladesh Macro Outlook 2026-30 report, titled “Shifting Gears,” CAL projects around 70% upside in the benchmark index from its late-July 2026 level of 5,896 points. The forecast is based on a combination of stronger corporate earnings, improving macroeconomic stability, monetary easing and a potential re-rating of the stock market.

CAL Bangladesh, a part of the CAL Group incorporated in the UAE with roots in Sri Lanka, previously received a Trading Rights Entitlement Certificate (TREC) from the Dhaka Stock Exchange to conduct stock-market operations under the brokerage firm named ACL Securities Limited.

The report, which tracks more than 450 macroeconomic and market indicators, argues that Bangladesh does not need an economic miracle to achieve the target. Rather, a return to historical growth patterns, combined with improving investor confidence, could drive the market higher.

Despite the bullish outlook, CAL has identified several risks. Global energy shocks could keep inflation elevated and delay interest-rate cuts, while unresolved banking-sector capital problems could limit the financial system’s ability to fund economic expansion.

Domestic energy shortages could also prevent industries from fully utilising their existing capacity.

Earnings growth and valuation re-rating

CAL expects corporate earnings to rebound by 26% year-on-year, supported by higher revenues as real incomes recover, improved operating margins as companies utilise spare capacity, and lower finance costs as interest rates decline.

The investment bank also expects the market’s price-to-earnings (P/E) multiple to rise from around 10.4 times currently to 14 times by end-2027.

According to CAL, the combination of higher earnings and a higher valuation multiple could provide the main fuel for DSEX to reach 10,000 points.

The report identifies three key drivers behind the expected acceleration: demographic expansion, productivity gains and monetary easing.

Bangladesh is adding around 11.5 lakh workers annually, with the working-age population growing by about 1.5% a year. CAL predicts that by 2030, the number of households in the middle-income category – defined here as those earning more than $325 per month – will rise by 28%, reaching 1.5 crore households.

This expanding consumer base is expected to support demand for consumer goods and services.

At the same time, Bangladesh has significant unused industrial capacity. Companies invested heavily in FY23, but production remained constrained by energy shortages and high borrowing costs. As these pressures ease, companies could increase output without immediately undertaking substantial new capital expenditure, improving profitability through operating leverage, according the report.

Monetary policy is another key factor. Bangladesh Bank delivered its first policy-rate cut in six years in mid-2026, and CAL expects the easing cycle to continue.

The 364-day Treasury bill rate, which has remained above 12%, is projected to fall to 7.7%-8.5% by June 2027, according to the report. Lower borrowing costs are expected to support private-sector credit and investment.

Macro stability and consumer boom

CAL believes Bangladesh has largely moved beyond the correction phase of 2023-25. Money growth has been restrained, while inflation has fallen more than three percentage points from its peak.

The country’s balance of payments has also returned to surplus and the foreign exchange market has stabilised, creating a more favourable backdrop for investment.

CAL expects the taka to remain relatively stable against the US dollar, reaching Tk125-Tk127 per dollar by June 2027, implying depreciation of only 1.5%-3.2%.

A more stable currency could also encourage foreign portfolio investors to return to Bangladesh’s capital market after staying on the sidelines amid currency volatility and the previous floor-price regime, the report added.

The report also projects Bangladesh to become the world’s ninth-largest consumer market by 2030, surpassing economies such as Germany and the UK. Per-capita GDP is expected to reach $4,000, supporting a shift from unbranded goods towards trusted and premium brands.

CAL said much of the infrastructure needed to support this consumption-led expansion is already in place or nearing completion. Electricity-generation capacity, for example, is expected to rise from 12.4GW to 28GW, while major infrastructure projects such as Dhaka Metro Rail and the third terminal of Hazrat Shahjalal International Airport are supporting economic activity.

CAL nevertheless maintains its “Accumulate Stocks” recommendation, arguing that these risks are more likely to affect the timing of the recovery than its overall direction.

The report concludes that investors who position themselves before the recovery becomes fully visible could benefit from the market’s next phase of growth.

Source: The Business Standard