Individual investor base shrinks in FY23
Having a painful bearish environment over two-thirds of the time, the stock market saw its individual investors base shrinking in the 2022-23 fiscal year.
According to the Central Depository Bangladesh Ltd (CDBL), the number of beneficiary owner (BO) accounts through which investors engage with the capital market, declined by nearly 2 lakh to 18.6 lakh over the fiscal year that ended this June.
In a rarely observed case over the recent years, the numbers of both types of accounts, having shares or not, declined at a time.
Market people said, the number of BO accounts have been in a gradual decline since the pandemic as the new regulations stopped the ones' lucrative business of primary share hunting through so many shady accounts.
However, the factor was not that strong in FY23 as most of the shady account operators shied away in 2021.
Instead, the number of real investors dropped in the bearish market that went abnormally complex for investors due to the floor price the regulator imposed at the end of July 2022.
The floors on individual scrips were not allowing stock prices regardless of their economic fundamentals. Also, most of the blue chip stocks had no buyer on the floor that made them unsellable on the bourses to deepen the pains of the investors who wanted an exit.
Number of BO accounts having shares was rising in 2020 as people found some profits there. For the first time since the pandemic, it dropped in the last fiscal year – to 13.96 lakh from 14.75 lakh.
Also, the number of empty BO accounts dropped 3.86 lakh at the end of June from 4.68 lakh a year ago, reflecting the market's failure to attract sufficient new investors.
Number of female investors, whom the capital market was encouraging a lot at once, dropped by more than 10% to 4.52 lakh.
However, a good news to the capital market's well-wishers was a steady growth in the number of institutional investors as the BO accounts owned by artificial entities increased to 16,845 at the end of June, up from 16,185 a year ago and 13,368 in the middle of 2020.
Bangladesh's underdeveloped stock market has been highly dominated by retail participants in number terms. In contrast, their influence in trend setting has been almost nil as their institutional or high net worth individual competitors own most of the invested capital with knowledge and information edge.
Lack of integrity and good governance was a major problem with the capital market, said a wide majority of respondents in the Bangladesh Capital Market Sentiment Survey 2023 which was conducted by the research team of Lanka Bangla Securities earlier this year.