The number of new beneficiary owner (BO) accounts are on the rising trend in recent months though the secondary market is going through a torrid time.
Some 87,782 new BO accounts were opened in the first four months in 2015, as investors were more confident in pouring funds into the primary market rather than the secondary one.
The total number of active BO accounts reached at 32,23834 on April 30, which was 31,36052 on January 1, 2015, according to the Central Depository Bangladesh Ltd (CDBL), which preserves electronic data of all individual and institutional investors.
Meanwhile, DSEX, the prime index of the Dhaka Stock Exchange (DSE), suffered a loss of around 818 points or 17 per cent in the last four months – January to April -- to close at 18-month lowest level of 4,047 points on April 30.
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 stock broker or a merchant bank.
All the investors, who got primary shares through IPO, saw good returns, which encouraged the investors along with the newcomers to participate in the next IPO, said an analyst.
“Beneficiary Owner accounts increased due to rise in initial public offerings in recent months. Many small investors always look for risk-free options of making quick profit,” he said.
A total of 21 companies floated IPO shares in 2014, and in the last four months -- January to April in 2015 -- five companies floated IPO shares. All the IPOs were oversubscribed manifold, as investors rushed for primary shares, expecting good returns from the investment.
In 2015, five companies – Zaheen Spinning, Bangladesh Steel Re-Rolling Mills, Tosrifa Industries, Shasha Denims, United Power Generation & Distribution Company raised funds through IPO.
Zaheen Spinning IPO oversubscribed by 74 times, BSRM IPO 20 times, Tosrifa Industries IPO 10.50 times, United Power IPO 6 times and Shasha Denims IPO oversubscribed by 5.35 times.
The securities regulator – Bangladesh Securities & Exchange Commission (BSEC) recently brought changes in the IPO application process allowing investors to apply for the IPO shares through the BO accounts opened with different brokerage firms.
“The performance of the primary market is relatively good as newly listed companies in recent time jumped manifold on their debut trading day, which also encouraged investors to get at least one IPO lot to book short-term profit,” brokers said.
Mohammad A Hafiz, former President of Bangladesh Merchant Bankers Association (BMBA) said “As there is no risk in the primary market, the investors showed interest in the primary market”.
Many investors open BO accounts only for applying IPOs and they sell shares in the debut trading day and withdraw money from the market, said Mr Hafiz, also a director of AAA Consultants and Financial Advisers, a issue management company.
The number of beneficiary owner (BO) accounts reached highest peak around 3.4 million in March, 2011 as people rushed to open accounts with different brokerage houses lured by the booming share prices, especially from October to early December, 2010.
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