Number of BO accounts plunges amid share price slump

Staff Correspondent | Published: 00:00, Oct 19,2019

 
 

A file photo shows a man monitoring the movement of share prices on a computer screen at a brokerage house in Dhaka. The number of beneficiary owners’ accounts has witnessed a sharp fall amid the relentless plunge in share prices at the market in recent months. — New Age photo

The number of beneficiary owners’ accounts has witnessed a sharp fall amid the relentless plunge in share prices at the market in recent months.

The number of active BO accounts stood at 25,62,313 on September 31 this year, while the figure was 28,17,041 on January 31 this year, according to the Central Depository of Bangladesh Limited data.

The market has been in a downward trend since January 24 this year. The core index of Dhaka Stock Exchange, DSEX, lost around 1,200 points in the period to close at 4,770 points on October 17.

The number of BO accounts did not fell below 26 lakh in last six years.

Market experts said the drop in the number of BO accounts showed that investors lost their interest in the capital market as the government and the market regulators apparently failed to revive the stock market after the 2009-10 crash.

They said investors lost their confidence in the market due to poor regulatory activities and approval of weak initial public offerings, lack of punitive measures against manipulators and errant people, failing to ensure governance, and asymmetrical regulatory approach towards investors.

Besides, the relentless fall in last nine months left investors no option but to withdraw their investments from the market, they said.

The government and market regulator Bangladesh Securities and Exchange Commission has taken some steps to halt the plunge at the market, but the efforts were in vain.

Stockbrokers said investors were unwilling to renew their BO accounts by paying annual fees by July this year or open new ones due to the market situation.

The number of BO accounts had dropped to 25,28,653 on August 1 this year.

According to the CDBL data, the number was 26,94,754 in September, 2018, 26,84,594 in September, 2017 and 29,12,384 in September, 2016.

Opening a BO account with the CDBL through a depository participant is a must for trading shares at the Dhaka and Chittagong stock exchanges.

In 2016, the BSEC reduced the renewal fee to Tk 450 from Tk 500 for each BO account with the aim of reducing financial burden on investors.

But the impact of the reduction was not significant.

Of the Tk 450, the CDBL gets Tk 100, while the government, DP and BSEC get Tk 200, Tk 100 and Tk 50 respectively.

Of the current active BO accounts, individual investors operate 16,22,252 BO accounts, investors jointly operate 9,27,094 BO ac counts and 11,525 accounts are operated by different companies, the CDBL data showed.

Of the accounts (excluding the company-operated BO accounts), 24,05,455 BO accounts are owned by Bangladeshi investors and 1,43,880 accounts by non-resident Bangladeshi investors, it showed.

Of the 26,94,361 accounts, 18,66,986 are owned by male investors and 6,82,360 by female investors.

The market has been bearish due mainly to bleak financial sector amid rising non-performing loans and liquidity crisis in the banks, tussle between Grameenphone, the largest capitalised company at the market, and telecom regulator Bangladesh Telecommunication Regulatory Commission over an audit claim.

Many investors open BO accounts only for getting returns from the primary market subscribing IPO shares, market operators said.

They said approval of IPOs became slow amid a spat of criticisms from different corners that the commission continued approving weak companies’ IPOs.

The number of BO accounts reached its peak at around 34 lakh in the fiscal year 2010-11, the year of market bubble-burst, as people rushed to open accounts with different brokerage houses lured by the booming share prices, especially from October to early December, 2010.

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