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The number of new beneficiary owner (BO) accounts is on the rise in recent weeks as new investors are entering the market to cash in on the bullish market.
About 31,451 accounts were opened in the last one and a half months, according to data from the Central Depository Bangladesh Ltd (CDBL), which preserves electronic data of all individual and institutional investors.
The number of active BO accounts stood at 2,330,591 as of September 14, up from 2,299,140 on August 3, the CDBL data show.
To trade in 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.
Market analysts said the rising number of initial public offerings (IPOs) under the new leadership at the securities regulator and the bullish market trend in recent weeks prompted people to open new accounts to invest in the market.
The investors are more confident in pouring funds into the secondary market amid growing confidence while guaranteed profit through IPOs encouraged the investors to bet on primary shares, said a merchant banker.
Of the total BO accounts, 1,710,160 accounts belong to males, 607,056 to female investors and 13,375 to companies. There are currently 1,499,746 individual accounts and 817,470 joint accounts, according to the CDBL data.
Investors, both old and new, started coming into the market gradually after a long time as the market is showing signs of recovery and returning to normal.
DSEX, the key index of the Dhaka Stock Exchange, surged 878 points or 20.8 per cent in one and a half months since August 3, 2020. The market capitalisation also added Tk 595 billion during the period under review.
The stock market regulator continued with its tough stance on gamblers and came up with a number of conditions for junk stocks and slapped several companies with big fines as part of its efforts to go tough on the wrongdoers.
The new leadership of the Bangladesh Securities and Exchange Commission has also taken some measures against errant directors of listed companies and cancelled some questionable IPO proposals.
The number of BO accounts increased due to rise in IPOs in recent time. A good number of IPOs are waiting to hit the market. Now, IPO subscription of Associated Oxygen is going on while Walton Hi-Tech Industries completed subscription recently.
Price-bidding for eligible investors (EIs) to fix the cut-off price of shares of Energypac Power and Mir Akhter Hossain will commence from September 21 and September 27 respectively.
"It is a good sign for the country's stock market as new investors are entering the capital market," said a leading broker while commenting on the rise of new BO accounts.
He noted that many 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, he said.
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 3.40 million in the fiscal year (FY) 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.