Low-profile cos’ share prices surging abnormally
Image: Bizbangladesh.net
The share prices of a number of weak and low-capitalised companies have been surging abnormally in recent days at an otherwise bearish market.
According to market operators, investors inject funds in low-profile companies with an expectation of sizeable returns in short time, but the majority of them incur losses at the end.
The general investors cannot resist temptation when the share prices of such companies keep jumping amid manipulations by some vested quarters, they said.
The share prices of the non-performing and low-capitalised companies started surging since July 22.
In the period from July 22 to September 5, the share prices of Monno Jute Stafflers shot up by 159 per cent or Tk 1,090 to finish at Tk 1,777.6 per share on Thursday.
In November last year, its share prices had crossed Tk 5,600 per share, starting from Tk 846 per share in April. The share prices then came down to Tk 1,330 for the adjustment of 350 per cent bonus dividend for 2018.
Now, the prices of the company, which has just Tk 2 crore in paid up capital, began to surge again on rumours.
In last one and a half months, the share prices of Monno Ceramics also soared by 64.64 per cent to end at Tk 222.6 per share.
The share prices of another low-capitalised company Stylecraft shot up by 80.55 per cent to end at Tk 870.8 per share.
Besides, the share prices of low-profile Kay and Que, which gave 5 per cent dividend after eight years of no-dividend, gained 57.45 per cent to finish at Tk 234 per share.
Despite a declaration of business closure, the share prices of Al-Haj Textile soared by 40 per cent in last one and a half months.
The share prices of some ‘Z’ category companies including BD Welding, Keya Cosmetics, Aziz Pipes and Northern Jute surged by over 40 per cent in the period sans any price sensitive information.
Considering the risk factors of making investments in such companies, the capital market regulator prohibits investments by taking margin loans in companies having PE ratio above 40.
Market experts said that some unscrupulous investors manipulated the share prices of such low-profile companies again and again under the nose of the capital market regulator.
The errant investors then spread various rumours involving the companies to increase the prices of the shares of the companies and at one stage dump the shares on the general investors at their expected prices, they said.
Almost all the companies which witnessed share price surge between 150 per cent and 40 per cent in the period showed poor business performance in terms of generating profits.
The Dhaka Stock Exchange asked only Monno Jute Stafflers, Kay&Que and Al-haj Textile to inform the bourse whether there was any price sensitive information behind their price hike and the entities informed the bourse that they had no undisclosed price sensitive information.
Market experts said that the capital market of the country was still driven by the retail investors and most of them had little knowledge about financial accounts and basic investment strategy in the stock market. Large-scale and knowledgeable investors are now reluctant to invest in the capital market due to volatility and lack of regulatory control over the market, they said.
Source: http://www.newagebd.net