37,000 BO account holders sell all shares in 11 days

Investors have sold all shares held by 37,243 beneficiary owner (BO) accounts in just 11 days of continuous decline in the Dhaka Stock Exchange (DSE) index in May.

Investors are pulling out of the stock market for fear of big losses in the falling market, says market insiders.

According to the Central Depository Bangladesh Limited (CDBL), which automatically maintains shares and BO accounts in the stock market, the number of the BO accounts that held shares on 27 April was 15.09 lakh.

At the end of the trading session on 19 May, it had come down to 14.71 lakh.

In the last 11 working days, the number of inactive BO accounts has increased by 38,541 to 4.91 lakh. When the total number of BO accounts in CDBL is 20.81 lakh, 24% of the accounts are inactive. 

And in these 11 working days of May, DSE's main index DSEX dropped by 6% or 419 points. The market capitalisation of the country's premier bourse decreased by Tk27,000 crore.

On 17 May, an investor said in a status on social media Facebook that his BO account has been emptied by selling all the shares.

He noted that this was due to the uncertainty over how long the stock market would be on a downward trajectory.

In the comments box of his status, many people have supported him for such a decision.

A top official at a brokerage firm said on condition of anonymity that the stock market was falling for three main reasons.

"These include the devaluation of money, commodities price hike and the Sri Lanka effect. In addition, amid rising inflation, the government has again taken steps to increase electricity prices," he added.

Meanwhile, the official also said, news has spread that interest rates on bank loans may be increased. As a result, investors are uncertain about the country's economy.

He further said that big investors are not active in the stock market. Which has made retail investors more disoriented. Investors are selling shares out of uncertainty and the rising cost of living.

A top official of a merchant bank said that due to the decline of the stock market, shares are also being sold from margin loan accounts. Because when the share price goes down, it becomes difficult to repay this loan.

Meanwhile, the Bangladesh Securities and Exchange Commission (BSEC) has taken steps to increase investment to stave off a stock market crash.

As part of this, it is releasing funds from the Capital Market Stabilization Fund (CMSF) for the Investment Corporation of Bangladesh (ICB).

Moreover, to increase the investment capacity of ICB, the BSEC is recommending various government institutions make deposits to the ICB.

The stock market regulator has recently asked four state-owned banks to extend the term of fixed deposits with the ICB.

The BSEC has also instructed the Dhaka Stock Exchange and Chittagong Stock Exchange not to buy-sell shares from closed BO accounts.

Besides, the 15-minute pre-opening session facility of stock exchanges has been cancelled. Because during that time some dishonest brokerage houses were abusing the facility.