Volatile market pushes investors to empty 66,500 BO accounts in 2025

The prolonged volatility and persistent confidence crisis in the country's capital market have pushed a significant number of investors to step away from equities, resulting in the emptying of thousands of beneficiary owner (BO) accounts this year.

Data from the Central Depository Bangladesh Limited (CDBL) show that at least 66,514 BO accounts were emptied of shareholdings in 2025, underscoring the depth of investor disenchantment amid falling indices, shrinking market capitalisation and ongoing economic uncertainty.

As of 24 December, the total number of BO accounts stood at 16.39 lakh, marking a decline of 42,789 compared to December 2024. The fall has been visible across all categories of investors.

Male BO accounts, which make up the bulk of market participation, declined by 27,884 to 12.33 lakh. Female accounts dropped by 15,024 to 3.88 lakh, while non-resident BO accounts fell by 3,144 to 43,547.

Infographic: TBS

Market insiders say the broad-based decline indicates that the exodus is not limited to a specific group but reflects a wider loss of confidence in the stock market.

More telling than the fall in total BO accounts is the sharp change in their usage. 

According to CDBL data, the number of BO accounts holding shares stood at 12.05 lakh as of 24 December. At the same time, BO accounts with zero balance increased by 23,538 to 3.67 lakh. This means a substantial portion of investors have chosen to keep their accounts active only on paper, without any exposure to equities.

CDBL data further show that none of the 16.39 lakh active BO accounts currently hold shares in all cases. Shares are concentrated mainly in just over 12 lakh accounts, while the remaining 3.67 lakh active accounts hold no securities at all. 

In addition, more than 67,000 BO accounts have reportedly remained unused after being opened. Market participants say this reflects a pattern where many investors enter the market during bullish phases but withdraw entirely after suffering losses.

A clearer picture of investor behaviour emerges from data compiled by the Bangladesh Securities and Exchange Commission (BSEC). As of the end of last July, there were 8.31 lakh BO accounts holding shares worth less than Tk1 lakh in market value. Another 2.85 lakh accounts had investments ranging from Tk1 lakh to a maximum of Tk10 lakh. Only 80,608 accounts held investments above Tk10 lakh but not exceeding Tk50 lakh, while just 24,225 individual and institutional BO accounts had investments above that level.

Most large portfolios belong to entrepreneurs, directors of listed companies, institutional investors or foreign investors.

Historical data suggest that the withdrawal is most pronounced among small investors. In November 2021, there were 27,030 accounts with investments exceeding Tk50 lakh, 2.51 lakh accounts with investments between Tk10 lakh and Tk50 lakh, and more than 17.37 lakh accounts with investments below that threshold. Comparisons over time indicate that small retail investors are leaving the market at a faster pace than larger or institutional players.

Officials at several brokerage houses say that although the number of BO accounts with shares stands at around 12 lakh, the number of genuinely active investors is far lower. By their estimates, the number of investors who trade or invest regularly may not exceed four to five lakh.

This contrasts sharply with other savings instruments in the country, where around five crore people invest in savings certificates and between 1.5 and 2 crore people hold fixed or term deposits in banks. The comparison underscores the limited appeal of the stock market as a long-term savings avenue for the general public.

Market performance this year has done little to inspire confidence. The Dhaka Stock Exchange's benchmark index, DSEX, has fallen by 333 points to 4,883, while the blue-chip DS30 index has plunged 57 points to 1,882. 

The DSEX had peaked at 5,631 points on 2 September, but persistent selling pressure has erased those gains. Market capitalisation has also declined significantly, dropping from a peak of Tk7.31 lakh crore to Tk6.76 lakh crore.

Investors and analysts cite several factors behind the downturn, including a lack of new initial public offerings, investors losing their investments due to bank mergers, overall market volatility and broader economic challenges.

A managing director of a brokerage firm said that investors naturally gravitate towards markets where returns are attractive and risks are manageable.

"People invest where the profit is high. They do not go where profit is low or where they fear losing capital," he said, adding that Bangladesh's stock market has failed to provide investors with a sense of security about returns.

He also noted that following the end of the previous misrule, there was hope that significant changes would take place under the current government. "Instead, investors observed the opposite in the stock market. People lost money and moved away even more. Those who could have come to invest are now staying away after seeing the disappointment of existing investors," he said.

On regulatory reforms, he acknowledged that while initiatives are underway, their benefits may only be felt in the long run. "Those for whom the changes are being made cannot be assured whether these changes will be of any use to them," he said, stressing the need to better communicate the purpose and expected outcomes of reforms. 

According to him, the regulator's role is not to bring investors into the market directly but to ensure a fair and transparent investment environment.

Regulatory initiatives so far include the finalisation of rules for mutual funds and margin loans, as well as a reduction in BO account maintenance fees. However, public issue rules, including those governing initial public offerings, are yet to be finalised. 

Market participants argue that without a steady pipeline of quality IPOs and visible improvements in governance and enforcement, restoring investor confidence will remain a formidable challenge.