Around 65,235 new BO accounts were opened in the past five months as investors were more confident in pouring funds into the primary market rather than the secondary one.
Guaranteed profit through initial public offerings (IPOs) encouraged the investors to hit the jackpot, brokers said.
To trade in the stockmarket and apply for primary shares, an investor has to open a BO (beneficiary owner’s) account with the Central Depository Bangladesh Ltd through a depository participant, which is usually a stockbroker or a merchant bank.
The data as of May 30, 2019 showed the total number of BO accounts increased to 2,845,026 which was 2,779,791 in January 01, 2019.
Among the BO account holders, 2,076,695 are males and 755,075 females, while the remaining 13,256 belong to different companies.
Market analysts said BO accounts increased in recent months due to rise in IPOs although mostly they were low-cap companies.
“It is a good sign for the country’s stock markets as new investors are entering the capital market,” said a leading broker while commenting on the rise of BO accounts.
Many retail investors always look for risk-free options of making quick-profit, said a merchant banker.
All the IPOs were oversubscribed manifold, as investors rushed for primary shares, expecting good returns from the investment, he said.
Investors, who got primary shares through IPO, saw good returns, which he said have encouraged the investors along with the newcomers to participate in the next IPO.
He said high bank interest rates, failure in securing bank loans, and flexible terms of the stock market attracted companies to go public in recent times.
Six new securities got listed on the Dhaka Stock Exchange (DSE) in five months in 2019.
A leading broker said the performance of the primary market is relatively good, as the share prices of newly listed companies skyrocketed on their debut trading days, which encouraged investors to collect at least an IPO lot to book some short-term profit.
He noted that investors usually open BO accounts to buy IPO shares. An insignificant portion of new BO account holders is typically involved in the secondary market.
In 2018, as many as 56,448 new BO accounts were opened, according to CDBL data.
Investors, both old and new, started coming into the market gradually after the national election was held peacefully in December, 2018.
However, it failed to keep the momentum as DSEX, the prime index of the DSE gained only 87 points in five months (January-May) after volatile trading in the secondary market.
Currently, an investor has to pay Tk 450 per annum to keep his/her BO account active.
The number of BO accounts reached its peak at around 3.4 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.
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