Enhanced investment policies and improved macroeconomic stability contribute to improved attitudes among foreign investors, as mentioned by Ruchir Desai.

Bangladesh's stock market is experiencing a revival, as foreign investors begin to take notice of the country's improving economic landscape. The macroeconomic picture in Bangladesh is turning positive, with inflation declining, political and policy stability improving, and investor confidence slowly coming back.

One of the key factors contributing to this shift is the stability of Bangladesh's political and macroeconomic environments, which have significantly improved compared to a year ago. This predictability has encouraged foreign investors to visit the country and see the changes on the ground for themselves. Incremental interest from foreign investors is already being observed.

Ruchir Desai, the founder of Asia Frontier Capital, has been investing in Bangladesh since 2013. He expects the outlook for the Bangladesh market to improve in the near term. About 9% of Asia Frontier Capital's fund, which is approximately $110 million, is currently allocated to Bangladeshi equities.

Asia Frontier Capital, a firm that collects funds from high-net-worth individuals and family offices, primarily from Europe, Switzerland, and the UK, invests in listed equities across Asian frontier markets, including Bangladesh, Pakistan, Sri Lanka, Vietnam, Kazakhstan, Uzbekistan, and Mongolia.

However, certain policies have hurt investor confidence in the Bangladesh market. Policies such as the interest rate cap, market closure during the pandemic, and the imposition of a floor price have raised concerns among investors. This, along with dollar depreciation adding more uncertainty, caused a dip in investor confidence, both local and foreign.

Despite these challenges, Bangladesh, like Sri Lanka and Pakistan, has not defaulted on debt. The country's economy has shown resilience, with inflation easing, the exchange rate stabilising, remittances remaining strong, and the current account being in surplus.

A smooth election in early 2026 with no major policy shifts would be a major trigger for the market. Such an event could further boost foreign investor confidence, which is gradually improving.

From 2013 to around 2018-19, Bangladesh's valuations were quite reasonable, with a price-to-earnings (P/E) ratio of 9.7, which is comparable to Sri Lanka during its market downturn. This low market valuation, coupled with the improving economic conditions, makes Bangladesh an attractive investment destination for foreign investors.

In conclusion, Bangladesh's stock market is on the rise, with foreign investors slowly returning to the scene. The country's improving economic conditions, stable political environment, and low market valuations make it an attractive investment destination for those looking to capitalise on the revival of the Bangladesh market.