Stocks
19 Days See 15K BO Accounts Liquidated
During May, a mere 19 trading days saw nearly 15,500 investors liquidate all their shares in their Beneficiary Owners (BO) accounts. Concurrently, 8,000 new investors opened BO accounts and joined the market.
This data, sourced from Central Depository Bangladesh Limited (CDBL), which manages the BO accounts and automates the shareholding process for stock market investors, paints a concerning picture.
According to CDBL, the number of zero-share BO accounts stood at 3 lakh 68 thousand 435 on April 30. By the end of May, this figure had increased to 3 lakh 83 thousand 928 indicating that 15 thousand 493 investors sold off all their shares during the month.
The rise in zero-share BO accounts has led to a decline in active BO accounts, those holding shares. As of the last trading day in May, the number of active BO accounts had decreased to 13 lakh 30 thousand 329 down from 13 lakh 43 thousand 639 at the end of April. Active BO accounts are defined as those holding shares and participating in the market.
According to data from the Dhaka Stock Exchange (DSE), out of the 19 trading days in May, the market experienced a decline on 14 days. This downturn affected the prices of most traded shares, with many companies facing a scarcity of buyers. To curb the falling prices, the Bangladesh Securities and Exchange Commission (BSEC) set a maximum daily price drop limit of 3% in April.
Due to this limit, a significant number of investors rushed to sell their shares at 3% lower prices as soon as the market began to fall each day. As a result, many companies’ share prices dropped by 3% at the start of trading, leaving no buyers for these shares.
Market insiders believe this situation arose due to the continuous decline in share prices. Panicked investors are selling shares to minimize losses, while lending brokerage houses and merchant banks are forcefully selling shares, known as “forced selling,” to adjust loans. Consequently, the number of zero-share BO accounts is increasing day by day.
As share prices continue to fall, forced selling also rises. According to regulations, when a share price drops below a certain limit, lending institutions can sell the shares in the investor’s BO account to adjust the loan. This process is known as forced selling in the stock market.
DSE data reveals that the main index of DSE dropped by 333 points or 6.5% overall in May. The DSEX index stood at 5,585 points at the beginning of May and fell to 5,252 points by the last trading day on Thursday. This decline has led to an increase in the number of zero-share BO accounts. According to CDBL, about 16,000 investors sold all their shares in April as well. Therefore, in the past two months, approximately 31,500 investors have sold all their shares from their BO accounts.
Reviewing the U.S. Stock Markets, the Nasdaq Composite, recorded a decent loss of 1,023 points, reaching a closing value of 16,690 points by the end of the week. Similarly, the S&P 500 index showed a positive trend, losing 240 points to settle at 5,408 points. Meanwhile, DJIA Index experienced a notable hike, adding 1,218 points during the week and concluding at 40,345 points after a week of gaining.
In contrast, Russell 3000 Index saw a loss in week performance, with a slight drop of 141 point to reach 3,077 points by the end of the week.
Moving to Russell 2000 Index, demonstrated a notable lost of 126 points, ending the week at 2,091 points.
In the Outgoing week, the European stock market displayed a mixed performance.
Here is the data on the weekly performance of the European Stock Market, The STOXX Europe 600 index, which is considered a leading benchmark for the European market and covers approximately 90 percent of the market capitalization across 17 countries, reported a loss of 18.49 points to close at 506.56.
The United Kingdom’s FTSE 100, one of the most widely followed indices in Europe, also showed a significant drop, losing 195 points or finishing the session at 8,181.
In Germany, the DAX 30 index, added by 605 points to reach 18,301, while France’s CAC 40 decreased by 278 points to stop at 7,352 at the end of the trading day.
Italy’s FTSE MIB, which covers the top 40 stocks traded on the Milan Stock Exchange, decreased by 1,081 points to 33,291. However, Spain’s IBEX 35, lost by 228 points, to close at 11,173.
A review of South Asian stock markets shows that India’s Bombay Stock Exchange (BSE) index BSE Sensex has lost 1,182 points during the week. At the end of the week, the index stood at 82,365 points. On the other hand, the Nifty-50 index of the country’s National Stock Exchange dropped by 383 points last week. At the end of the week, the index stood at 24,852 points.
Pakistan Stock Exchange Index ‘KSE 100’, added 459 points last week. After a week of losing, the index settled at 79,002 points.
On the other hand, The Sri Lankan stock market index loss, and the Colombo Stock Exchange index ‘ASPI’ decreased by 94 points in a week. After a week the index settled at 10,775 points.
Bhutan’s stock market index ‘BSI’ dropped by 9 points hence the index stood at 1,500 points throughout the whole week. Nepal’s ‘NEPSE’ lost 22 points, therefore the index stands at 2,727 points.
Hence Dhaka Stock Exchange: The benchmark index ‘DSEX’ lost by 75.77 points or 1.31 percent, in the outgoing week. At the end of the week, the index stands at 5,728 points.
