• Sunday, Sep 22, 2019
  • Last Update : 02:36 pm

BO accounts on rise amid free fall of stocks

  • Published at 03:28 am April 12th, 2019
web-DSE-File photo of Dhaka Stock Exchange Limited
File photo of Dhaka Stock Exchange Limited Mehedi Hasan/Dhaka Tribune

69,500 new accounts opened, DSE sheds 535.7points in three months

The number of new beneficiary owner (BO) accounts has kept on growing despite the continued negative trends in both broad index and turnover. 

Small stock investors continued their demonstration on Thursday protesting at the continued fall of the key indices at the stock exchanges although the market gained 64 points in the day’s trading. 

Around 69,500 accounts were opened over the last three months, according to the Central Depository Bangladesh Ltd (CDBL) data.

Market operators said that the number of new companies coming to the market with initial public offering (IPO) was increasing so the number of BO account holders was also increasing.

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), lost 535.7 points in the last three months. Turnover, another important indicator of the market, also dropped. 

On Wednesday, the turnover hit one-year low. On the day, the market capitalization stood at Tk392895 crore, which was Tk4,10,531 crore on January 10.

But defying all these negative trends, as many as 69,500 BO accounts were opened in last three months, bringing the total number to 28,47,485, which was 27,77,985 three months ago on 10 January, according to CDBL.

A total of 2,078,067 BO accounts belong to males and 7,56,315 to female investors. There are currently 1,788,283 individual accounts, 1,046,099 joint accounts and 13,103 company accounts.

Stakeholders of the market said investors usually opened new BO accounts to buy initial public offering (IPO) shares. An insignificant portion of new BO account holders is typically involved in the secondary market.

An abnormal surge in the share prices of newly listed companies recently, after their debuts at the stock exchanges, encouraged people to open new BO accounts.

Bangladesh Merchant Bankers' Association (BMBA) president Mohammed Nasir Uddin Chowdhury told the Dhaka Tribune that new companies were coming to stock market, which in turn was attracting new investors in the market.

“This is good news,” he observed, expressing his hope that new people would understand and invest in the market. 

According to DSE data, fund collection of businesses through IPOs saw a big leap to Tk546 crore — raised by 13 companies — as of early December 2018, up by 149% from Tk219.25 crore the previous year. 

Stockbrokers and merchant bankers have also welcomed new investors, which they hope will make the capital market more vibrant.

They said that it was definitely a good sign for the capital market, but the new investors should be cautious. It would be best for the new BO account holders to remain in IPO than moving to invest directly in the market, they think.  

Dhaka Stock Exchange Brokers' Association (DBA) president Shakil Rizvi said IPOs of quality companies should be approved so that the investors got better dividends and did not lose their money. 

He said that the stakeholders should put emphasis on the quality IPO to regain confidence of the market.

“The DBA president said: “If good companies do not apply for the IPO, we must look for them and continue our efforts to bring them in the market,” he added. 

Following the stock market crash in 2010, the number of new BO accounts dropped drastically. Many investors left the market, affecting the price indices and daily turnover of the country’s two bourses — DSE and the Chittagong Stock Exchange (CSE).