BO accounts drop off in lakhs as investors bolt

09 Jul 2020 11:37 AM
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In 2016, Masum Ahmad, an accountant who dabbles in the stock market on the side, had as many as seven beneficiary owner (BO) accounts in the name of his family members.

Now, he has only two such accounts, which is a must to buy and sell stocks.

He closed down the other five accounts in August, as the bear run that started in January went on longer than his liking.

“Stocks no longer yield healthy profit and maintaining such accounts has a cost,” said the pessimistic Ahmad, adding that it costs Tk 3,000 a year to maintain an account, including the bank charges.

Ahmad is not alone in his thinking. Some 2.5 lakh BO accounts were closed since the ongoing bear run started in the Dhaka Stock Exchange, in the strongest indication yet of retail investors’ gloomy outlook for the capital market.

On January 24, when DSEX, the benchmark index of the DSE, stood at 5,950, the highest yet this year, the total number of BO accounts was 28.13 lakh, according to data from the Central Depository of Bangladesh (CDBL).

As per the latest CDBL data, which is of September 26, there are 25.62 lakh BO accounts. On that day, DSEX stood at 4,947.63.

During the period, the market lost Tk 46,134 crore, which is 10.98 percent of its capitalisation.

Some investors left the market as they incurred huge losses for the depressed state of the stock market, while some squeezed their investment into one or two portfolios, said a high official of a brokerage house, which is allowed to open BO accounts.

Many also closed down their accounts for the shrinking initial public offerings (IPO) in recent times, he said.

In the first nine months of the year eight companies got listed, in contrast to 13 companies and one mutual fund in 2018, according to data from the DSE. Those who manage stocks during the IPO pay the face value and later sell at at least twice the price.

One such dejected IPO hunter is Ahmad. “In the last three years, I have won only one lottery of Kattali Textile.”

Kattali Textile got listed on November 12 last year and he bought 5,000 stocks at Tk 10 each. He sold them off 4-5 days later, when the stock hit Tk 33.

“I don’t think the market will get back to its heady days anytime soon. So it is best for me to retreat for a while,” the crestfallen retail investor added.