An abnormal surge in the share prices of newly listed companies last year, after their debuts at the stock exchanges, encouraged people to open new BO accounts
As many as 56,448 new beneficiary owner (BO) accounts were opened in 2018, bringing the total number to 2,778,796, according to Central Depository Bangladesh Limited (CDBL).
Among the BO account holders, 2,027,005 are males and 739,212 are females, while the remaining 12,579 belong to different companies.
Stakeholders of the market said investors usually open new BO accounts to buy initial public offering (IPO) shares. An insignificant portion of new BO account holders is typically involved in the secondary market.
An abnormal surge in the share prices of newly listed companies last year, after their debuts at the stock exchanges, encouraged people to open new BO accounts.
High bank interest rates, failure in securing bank loans, and flexible terms of the stock market attracted companies to go public, analysts said.
Additionally, gaining good exposure to foreign buyers,whoprefer listed firmsto source products from, and demutualization of the Dhaka Stock Exchange (DSE)also attracted firmsto get listed on the prime bourse through issuing IPOs.
According to DSE data, fund collection of businesses through IPOs saw a big leap to Tk546 crore—raised by 13 companies—as of early December 2018, up by 149% from Tk219.25 crore the previous year.
Following the stock market crash in 2010, a number of new BO accounts dropped drastically. Many investors left the market, affecting the price indices and daily turnover of the country’s two bourses_ DSE and the Chittagong Stock Exchange (CSE).
Stockbrokers and merchant bankers have also welcomed new investors,hoping to make the capital market more vibrant.
“It is a good sign for the country’s stock markets as new investors are entering with fresh funds,” said a stockbroker while commenting on the rise of new BO accounts.
A general investor of the stock market,Hanif Bepari, said: “Our secondary market is not that good, so we will try to succeedin the primary market [through IPOs]. Last year, there were a good number of IPOs, and that is why the number of new BO accounts rose."
Speaking to the Dhaka Tribune, DSE Director Rakibur Rahman said:"Itis definitely a good sign for the capital market, but new investors should remain cautious. It is best for new BO account holders to stick totrading in the primary market,instead of investing directly in the[secondary] market.”
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