Stock Market : 1.2 Million Investors Lost in Eight Years

Dhaka Office : Over the past eight years, more than 1.2 million investors have withdrawn from Bangladesh’s stock market. The Bangladesh Securities and Exchange Commission (BSEC) attributes this decline to market volatility, the transition from IPO lotteries to proportional share allocation, and the closure of multiple beneficiary owner (BO) accounts opened under false or multiple identities.

On Thursday (January 9), BSEC’s Executive Director, Rezaul Karim, explained the situation. He noted that investors previously opened multiple BO accounts, both resident and non-resident, under different names to gain higher chances in IPO lotteries. In 2021, BSEC replaced the lottery system with proportional share distribution, reducing the probability of receiving shares. Consequently, many investors lost interest in maintaining multiple BO accounts and stopped paying the annual fees, leading to a significant decline in active accounts.

Declining Number of BO Accounts

According to data from the Dhaka Stock Exchange (DSE):

• In 2016, the total number of BO accounts was 2,929,189.
• By 2024, this number dropped to 1,664,952.
• Over eight years, a total of 1,264,237 accounts have been closed.
• In 2023, there were 1,756,104 BO accounts, meaning over 90,000 accounts closed in just one year.

Why Are BO Accounts Declining?

BSEC highlights several reasons behind this trend:
📌 Shift Towards Safer Investments: Many investors are opting for risk-free investments such as government securities, savings bonds, treasury bills, and bonds, which offer higher interest rates.
📌 Market Volatility & Poor Returns: A lack of expected profits in the stock market has frustrated investors, prompting them to withdraw.
📌 Declining Market Index: The benchmark index has fallen by nearly 1,000 points over the past year.
📌 Lack of New Listings & Low Corporate Profits: Fewer new company listings and declining corporate earnings have further contributed to investor dissatisfaction.
📌 Global Economic Uncertainty: Factors like the post-COVID economic downturn, the Russia-Ukraine war, and political instability have negatively impacted the market.

Positive Developments

Despite the declining number of individual investors, Rezaul Karim pointed out a rise in institutional investors—a positive indicator for the stock market. He emphasized that BSEC’s ongoing reforms will help restore investor confidence and lead to a resurgence in BO account registrations.

Final Thoughts

While the decline in retail investors is concerning, BSEC believes that increased institutional investment could bring stability to the market. To regain investor confidence, effective market reforms and more new company listings are necessary.

📌 Source: CorporateNews24 | Jubayer