Unit prices of SEML-managed MFs increase abnormally
Image: Bizbangladesh.net
The prices of three mutual funds, which are managed by Strategic Equity Management Limited, unusually shot up recently.
Stock market experts said the record breaking run of one of them — SEML FBLSL Growth Fund — stunned investors.
They said investors’ rumour-based investments were a major reason for the abnormal hike in the prices of the three funds.
Lack of effective action by regulator Bangladesh Securities and Exchange Commission against manipulators and rumour-mongers also contributed to the unusual hike in share prices at the stock market, they said.
The unit price of SEML FBLSL Growth Fund shot up by 344 per cent in last 16 trading sessions from Tk 10 a unit to close at Tk 44.4 on July 25.
The fund’s net asset value was Tk 10.68 per unit on July 4, 2019 and earnings per unit was just Tk 0.03 in January- March, 2019. The fund made its debut on the country’s stock exchanges on March 4 this year.
The price earnings ratio of the mutual fund stood at 1,480. The ratio means that investors need to wait 1,480 years to get back their investments.
The price hike broke all the previous records in the mutual funds sector.
Before July, all the mutual funds except five were being traded far below their face value and the highest price was of Grameen One-Scheme Two (Tk 15 per unit).
The BSEC on July 16 cancelled the option of declaring bonus dividend by mutual funds. The closed-end and open-end mutual funds can declare cash dividend only from now on.
Market operators said that prices of mutual funds had been rising due to the BSEC’s move.
But, the hike in the unit prices of SEML FBLSL Growth Fund was abnormal and the BSEC should look into the matter, they said.
In response to a Dhaka Stock Exchange query on July 14, the fund manager of the mutual fund informed on July 15 that there was no undisclosed price sensitive information of the fund for the recent unusual price hike.
Of the total units of SEML FBLSL, the sponsor-directors hold 51.41 per cent, institutional investors 48.44 per cent and general investors only 0.15 per cent.
A senior official of Strategic Equity Management told New Age that the price hike of SEML FBLSL was unusual that embarrassed the fund manager.
He said that as a very low number of units were held by the general investors, it was easy for some people to manipulate its price.
SEML IBBL Sharia Fund and SEML Lecture Equity Management Fund also surged by 119 per cent and 58 per cent respectively in last 16 trading sessions.
Market experts said that investors typically rushed to buy shares of a company or units of mutual fund whenever the share/unit prices of the company or mutual fund started rising.
Investors who buy shares of a company or units of a mutual fund without analysing the scrips ultimately suffer as manipulators dump the shares or units on the general investors, they said.
They also said that the BSEC failed to stamp out fraudulent activities at the market due to its lax action.
Source: http://www.newagebd.net
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