Bangladesh’s capital market is experiencing a prolonged bearish trend, leading to a significant exodus of investors. Data from the Central Depository Bangladesh Limited (CDBL) reveals that in the first nine months of the current year, approximately 62,000 investors have become inactive in the stock market.
While the COVID-19 pandemic saw an increase in investor interest and a corresponding rise in Beneficiary Owners (BO) accounts, this trend began to reverse in mid-2021. Since then, the number of BO accounts has steadily declined, signaling a growing lack of confidence among investors.
The Scale of Investor Withdrawal
An analysis of CDBL data shows a substantial decrease in active participation and overall BO accounts: Total BO Accounts Decline: The total number of BO accounts dropped by 30,225—from 1,682,452 on December 31 of last year to 1,632,227 by September 30. Share-Zero Accounts Increase: Over the same nine-month period, the number of BO accounts holding zero shares increased by 31,885 (from 343,974 to 375,859).
Combined, the decline in total BO accounts and the rise in share-zero accounts indicate that a total of 62,110 investors have become inactive in the capital market during the nine months of the current year.
As of September end, the BO accounts that still hold shares numbered 1,209,207. These accounts collectively hold 10,257 crore shares and units, with a total market value of BDT 316,042 crore. This is a marginal increase in value compared to BDT 309,373 crore at the end of December last year, despite the significant withdrawal of investors.
Reasons for Investor Apathy
The head executive officer of a prominent brokerage house, speaking to Dhaka Post, attributed the exodus to persistent market anxiety and a lack of regulatory intervention.
“A long-term fear is prevailing among investors,” the CEO stated. “Moreover, the regulator has not taken significant steps to boost confidence in the market. The prolonged absence of any new Initial Public Offerings (IPOs) has also discouraged many investors, leading them to leave the market.”
Gender and Geographic Breakdown
The market slump has affected all categories of investors: Male Investors: The number of male BO accounts decreased by 19,722, falling from 1,261,198 to 1,241,476. Female Investors: Female BO accounts saw a decrease of 10,735, dropping from 403,755 to 393,020. Local (Domestic) Investors: Domestic investors’ BO accounts decreased by 27,567, settling at 1,590,695. Foreign & Non-Resident Bangladeshis (NRBs): Foreign and NRB BO accounts collectively decreased by 2,890, totaling 43,801.
Optimism for the Future
Despite the current downturn, Saiful Islam, President of the DSE Brokers Association of Bangladesh (DBA), remains hopeful for a market recovery. “The annual maintenance fee for investors’ BO accounts has been reduced, which should help retain existing investors,” Islam told Dhaka Post. “Furthermore, the regulatory body is undertaking several measures to improve the market in the long term. Investor confidence will increase once the effects of these initiatives begin to manifest.”
