Site icon The Bangladesh Chronicle

43,000 new BO accounts in 5 months

The number of beneficiary owners’ accounts has increased by 43,000 in last five months amid a surge in the stock prices at the country’s bourses.
Opening a BO account with the Central Depository Bangladesh Limited through a depository participant, which is usually a stockbroker or a merchant bank, is a must for trading shares at the Dhaka and Chittagong stock exchanges.
The number of BO accounts rose to 29,55,413 as on March 2 this year from 29,12,384 as on October 1 last year. The key index of Dhaka Stock Exchange, DSEX, added 896 points in the period.
The rise in the number of BO accounts came after the closure of around 2.50 lakh BO accounts for non-renewal issues after the June 2016 timeframe.
Stockbrokers said investors usually open new BO accounts or revive their suspended BO accounts when they find the primary (initial public offering) market vibrant and the secondary market bullish.
The primary market was relatively dull during the year 2016 following the amendment of the public issue rules in December 2015 with fund raising by the companies from the capital market hitting a six-year low, they said.
According to a DSE report, fund raising from the capital market by issuer companies through IPOs declined by 34.33 per cent or Tk 448 crore in the fiscal year 2015-16 compared with that in the previous fiscal year.
Eleven companies raised Tk 858.30 crore through IPOs in FY16 while 16 companies had collected Tk 1,306.97 crore from the market under the same process in FY15.
As a result of a dull IPO market, a large number of investors refrained from renewing their BO accounts and potential investors did not open new BO accounts in most of the time in last year, stockbrokers said.
On the other hand, the capital market was relatively sluggish during the fiscal year 2015-16, which was another reason for the discontinuation of a significant number of BO accounts after June 2016, they said.
They said that investors, however, started to renew their existing BO accounts and open new accounts from late 2016 when the market began recovering.
The DSEX which was at 4,690 points on October 2 last year finished at 5,586 points on March 2 after reaching its all-time high at 5,708 points on January 24.
Currently, an investor has to pay Tk 500 per annum to keep his/her BO account active.
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, lured by the booming share prices, then had rushed to open accounts with different brokerage houses.
Source: New Age
Exit mobile version