Opening of beneficiary owner's accounts for trading on the capital market has slowed down in the just-concluded fiscal year because of the stock market debacle and lack of initial public offerings in the second half.
According to the Central Depository of Bangladesh Limited data, the number of active BO accounts reached 31,09,717 on June 30, up by 5,47,878, or 21.38 per cent, from 25,61,839 on June 30, 2010. Whereas, in 2009-2010, a total of 11,60,674 BO accounts were opened, posting a 82.83 per cent year-on-year growth, and the number of BO account holders was 14,01,165 at the end of 2008-2009, compared to 10,71,252 on June 30, 2008.
Market operators said, although the growth in opening of BO accounts was high in the first half of the last fiscal year, a prolonged bear run in December 2010 to June 2011 and lack of IPOs discouraged many potential investors from opening BO accounts, while many investors even closed their accounts.
'Investors usually open BO accounts either to apply for IPOs or to trade on the secondary market. More than half of the BO accounts are opened to subscribe primary shares and these accounts remain idle for most part of the year,' said a stockbroker.
The number of BO accounts reached around 32,60,000 in December 2010 as people rushed to open accounts with different brokerage houses lured by the booming share prices, especially in the October to December.
The investors had continued to open BO accounts heavily till April 2011, despite massive slides in share prices in December to March, with the number of BO accounts reaching around 34,00,000.
'But, in the fag end of the last fiscal year, investors seemed to lose interest in opening BO accounts, when around three to four lakh BO accounts were closed as investors did not renew their accounts,' said a market operator.
He said the high renewal cost of Tk 500 for BO accounts also discouraged the primary investors from maintaining the accounts.
Market operators said the Securities and Exchange Commission discouraged floating of IPOs in the second half of 2010-2011 due to lack of liquidity in the market after the stock debacle. 'As a result, those who only intend to subscribe primary shares were discouraged from opening BO accounts.'
Only four companies and two mutual funds floated IPOs in the last six months while the total number of IPOs in the just-concluded fiscal year was 19.
Source : New Age
