The number of new beneficiary owner (BO) accounts continued to rise as the stock market is showing a signs of stability after the latest market debacle in 2010-2011.
Market operators attributed the rising trend of new BO accounts to higher number of initial public offerings (IPOs) and stability in the secondary market under the new leadership of the securities regulator.
Around 190,480 new BO accounts were opened in the just two months, according to data of the Central Depository Bangladesh Limited (CDBL), which preserves electronic data of all individual and institutional investors.
The number of BO accounts may rise further in near future as the securities regulator has recently allowed stockbrokers to open digital booths at home and abroad, they said.
To trade on the stock market and apply for primary shares, an investor has to open a BO account with the CDBL through a depository participant, which is usually a stockbroker or a merchant bank.
Total number of BO accounts increased to 2,543,453 as of December 24, which was 2,352,973 two months back on October 24, the CDBL data shows.
Of the total number of active BO accounts, male investors own 1,871,581 and female investors own 658,082 while the remaining 13,790 belong to different companies as of December 24, 2020, the CDBL data shows.
Currently, there are 1,624,144 individual accounts and 905,519 joint accounts. The non-resident Bangladeshis won 155,480 accounts to conduct share transactions or to apply for IPO shares.
“It is a good sign for the country’s stock markets as new investors are entering the market,” said a leading merchant banker while commenting on the rise of BO accounts.
He noted that investors are started coming into the market gradually as the market is showing signs of stability after the latest market debacle in 2010-2011.
DSEX, the core index of the Dhaka Stock Exchange (DSE) surged 1,158 points or 28.52 per cent in seven months since the market resumed on May 31, after remaining shut in more than two months due to Covid-19 pandemic.
The number of BO accounts increased due to higher number of initial public offerings (IPOs) in recent months as many people open BO to apply for IPO shares, said a leading broker.
The Bangladesh Securities and Exchange Commission (BSEC) approved IPOs of 15 companies in the past six months, including the biggest-ever IPO of Robi Axiata, to raise nearly Tk 14 billion collectively, making the primary market vibrant.
A good number of IPOs are also waiting to hit the market. IPO subscription of Mir Akther Hossain, an infrastructure developer, is going on which will raise Tk 1.25 billion.
IPO subscriptions of two companies – Taufika Foods & Agro Industries and eGeneration- will open January 3 and January 12 respectively.
IPO subscription of another big company – Lub-rref (Bangladesh), a lubricant company, is set to open end of January, which will raise Tk 1.50 billion under the book-building method.
The retail investors always look for risk-free options to make quick profit. As almost all IPOs were oversubscribed manifold, investors rushed for primary shares, expecting good returns from the investment, said a DSE director.
“Guaranteed profit through initial public offerings encouraged the investors to bet on primary shares,” he said.
Currently, an investor has to pay Tk 450 per annum to keep his/her BO account active. Of the Tk 450, the CDBL gets Tk 100, while the government, DP and BSEC get Tk 200, Tk 100 and Tk 50 respectively.
The number of BO accounts reached its peak at around 3.40 million in the fiscal year 2010-11, the year of market bubble- burst, as people, lured by the booming share prices, then had rushed to open accounts with different brokerage houses.