FE Today Logo

Investors active to hit the jackpot

Primary market adds 220,766 new BO accounts in 7 months

FE Report | March 10, 2019 00:00:00

Around 220,766 new BO accounts were opened in the past seven months as investors were more confident in pouring funds into the primary market rather than the secondary one.

Market analysts welcomed the new BO (beneficiary owner's) account holders and suggested them to be cautious while investing in the market.

"Guaranteed profit through initial public offerings (IPOs) encouraged the investors to bet on primary shares," said a leading broker.

He noted that although many BO accounts fell inactive during the period, the rising participation after the national elections is a good sign.

To trade in the capital and apply for primary shares, an investor has to open a BO (beneficiary owner's) account with the Central Depository Bangladesh Ltd (CDBL) through a depository participant, which is usually a stockbroker or a merchant bank.

The total number of BO accounts stands at 2,837,721 as on Thursday which was 2,616,945 in August 01, 2018, according to the CDBL, which preserves electronic data of all individual and institutional investors.

Of the total number of BO accounts right now, male investors own 2,071,164 accounts while female investors 753,592 and company 12,965 as of Thursday, the CDBL data shows.

There are currently 1,782,361 individual accounts, 1,042,395 joint accounts and 12,965 company accounts.

All the investors, who got primary shares through IPO, saw good returns, particularly debut trading in recent months, which encouraged the investors to open new BO accounts, said a merchant banker.

Despite the secondary market witnessed volatility, the primary market was bullish during the period under review.

Some eight companies raised funds through issuing IPO shares during the period under review and all companies' IPO oversubscribed many times.

The merchant banker noted that all the IPOs were oversubscribed manifolds, as investors rushed for primary shares, expecting good returns from the investment.

Aman Cotton Mills, VFS Tread Dyeing, ML Dyeing, Silva Pharmaceuticals, Indo-Bangla Phjarma, Kattali Textile, SS Steel and Genex Infosys raised funds through IPO during the period.

Investors, both old and new, started coming into the market gradually after the national elections and the trend escalated in 2019 as the market started returning to normalcy, he said.

The prime index of the Dhaka Stock Exchange (DSE) rose 363 points or 6.78 per cent in the past seven months (August 01, 2018 to February 28, 2019), which is attracting the new investors.

The number of BO accounts reached its peak at around 3.40 million 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.

[email protected]

Share if you like