Almost 3,000 BO accounts closed in 4 days in Bangladesh

Last week, many investors decided to sell their shares, close their beneficiary owners (BO) accounts, and completely withdraw from share trading. In just four working days, over 3,000 investors took this action.

An exciting scenario was uncovered after analysing the BO account data of the central depository Bangladesh Limited (CDBL). The CDBL serves as a regulatory agency responsible for recording and facilitating securities trading in Bangladesh.

With the start of the new fiscal year 2024-25, the share market experienced a notable shift towards an upward trend in the previous week.

An increase in indices and turnover was seen. The DSEX, the primary index of the Dhaka Stock Exchange (DSE), saw a substantial 142-point increase over the four trading days of the week.

Additionally, the average turnover saw a notable increase of nearly 10 percent, reaching Tk 6.16 billion.

However, a considerable portion of investors have opted to exit the market.

As per the latest data from the CDBL, there was a slight decrease in the number of BO accounts with shares.

On 30 June, the last day of the previous fiscal year, the number stood at 1,305,751. However, by 4 July, the last working day of the previous week, it had declined to 1,302,346.

Over four days, 3,405 BO accounts were closed as investors decided to sell off all their shares due to concerns.

According to the regulations, a BO account must be updated every July by paying an annual maintenance fee.

Some investors, refusing to pay the tax, opt to sell their shares and close their BO accounts. As a result, the market sees a decrease in active BO accounts.

Last week, there was a decrease in the number of active BO accounts in the stock market.

The count dropped from 1,775,146 on 30 June to 1,771,125, a decrease of approximately 4,000. Over the past four trading days, a significant number of 4021 BO accounts have been closed.

According to market analysts, the stock market has been experiencing a prolonged recession. The DSEX index experienced a significant decline in the last fiscal year, dropping by 1,015 points or 16 percent.

It went from 6,343 points to 5,300 points. Investors are being prompted to leave the market due to the declining trend.

Many investors faced difficulties selling their shares for an extended period due to the floor price system.

As the restrictions were gradually lifted starting from 19 January, some individuals saw this as a chance to sell off their shares, even if it meant incurring losses, and leave the market.

Recent reports from CDBL sources indicate a concerning trend among investors who close their BO accounts without fulfilling their annual maintenance fee obligations.

The precise tally of investors who have closed their BO accounts will be disclosed by the end of July.