37,000 BO account holders sell all their shares in 11 days
Investors sold all shares held by 37,243 beneficial owner (BO) accounts in just 11 days of the Dhaka Stock Exchange (DSE) index’s continued decline in May.
Investors are pulling out of the stock market for fear of big losses in the falling market, market insiders say.
According to the Central Depository Bangladesh Limited (CDBL), which automatically manages shares and BO accounts in the stock market, the number of BO accounts that held shares on April 27 was 15.09 lakh.
By the end of the May 19 trading session, it was down to 14.71 lakh.
In the last 11 working days, the number of inactive BO accounts increased from 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 those 11 working days in May, DSE’s main DSEX index fell 6% or 419 points. The market capitalization of the country’s top stock exchange decreased by Tk 27,000 crore.
On May 17, an investor said in a status on the social network Facebook that his BO account had been emptied by selling all the shares.
He noted that this was due to uncertainty over how long the stock market would be on a downward trajectory.
In the comment box of his status, many people supported him for such a decision.
A senior brokerage official said on condition of anonymity that the stock market was down for three main reasons.
“These include currency devaluation, rising commodity prices and the Sri Lanka effect. In addition, against a backdrop of rising inflation, the government has again taken measures 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 added that large investors are not active in the stock market. Which made retail investors more confused. Investors are selling stocks due to uncertainty and the rising cost of living.
A senior merchant bank official said that due to the stock market decline, stocks are also being sold from margin loan accounts. Because when the share price falls, it becomes difficult to repay this loan.
Meanwhile, the Bangladesh Securities and Exchange Commission (BSEC) has taken steps to increase investments to avoid a stock market crash.
In this context, it releases funds from the Capital Market Stabilization Fund (CMSF) for the Investment Corporation of Bangladesh (ICB).
In addition, to increase the investment capacity of the ICB, the BSEC recommends that various government institutions make deposits with the ICB.
The stock market regulator recently asked four public banks to extend the term of term deposits with the ICB.
The BSEC also ordered the Dhaka Stock Exchange and the Chittagong Stock Exchange not to buy-sell shares from closed BO accounts.
Additionally, the exchanges 15-minute pre-open session feature has been cancelled. Because during that time, some dishonest brokerage houses abused the facility.