Regulator forms panel to see reasons behind the rise
Listed companies with low capitalisation gained in between 50 percent and 244 percent in one month and a half though they had no price sensitive information or any expansion plan, according to Dhaka Stock Exchange.
From July 31 to September 17, firms with capital ranging between Tk 40 lakh and Tk 31 crore saw an abnormal price hike amid a slow mood in the market, which led investors to buy shares at higher prices that may cause a massive loss in their portfolios.
A total of 12 companies gained in between 100 percent and 244 percent in the time, three companies rose more than 90 percent and 14 firms more than 50 percent, DSE data showed.
The DSE management yesterday suspended trading of CVO Petrochemical Refinery shares for an indefinite period, as the bourse started investigation into the abnormal price hike in the low cap company’s stock.
CVO Petrochemical Refinery Ltd with a paid-up capital of Tk 18 crore gained 103 percent in prices in the one and a half months, according to the DSE.
The company has reported net profit after tax of Tk 47.4 lakh with earnings per share of Tk 0.26 during January-March.
Mizanur Rahman Zaved, the company’s chief financial officer, said, “We have no price sensitive information.”
The sponsors of the company hold 50 percent of the total shares and they are not selling any share despite the high prices, he added.
JMI Syringes and Medical Devices Ltd, which has a paid-up capital of Tk 11 crore, advanced 244.82 percent during July 31-September 17, according to the DSE website.
The company has reported net profit after tax at Tk 98.5 lakh with earnings per share of Tk 0.90 during March-June.
“Our business is going on as usual, and right now we have no plans for further expansion,” said Muhammad Tarek Hossain Khan, the company secretary.
The company informed Bangladesh Securities and Exchange Commission and the DSE that it has no price sensitive information, he said.
The regulator formed an investigation committee on September 15 to look into the recent hike in share prices of the 13 companies, including JMI Syringes and Medical Devices Ltd, CVO Petrochemical Refinery Ltd, Tallu Spinning Mills Ltd, Bangas, and Mithun Knitting.
The two-member committee was asked to submit its report within 15 working days.
BSEC Executive Director Saifur Rahman said: “We have brought the low-cap companies under scanner. We are looking into how they generated such an abnormal gain.” Even after the formation of the inquiry committee, the prices of these companies have not stopped rising, which may cause the investors to incur massive losses, Rahman said.
The regulator found some unusual activities in the share trading of JMI Syringes and Medical Devices, another BSEC official said, asking not to be named. The regulator’s enforcement department will take action against the company soon, he said.
The DSE also served a show-case notice on 16 low-cap companies on September 16.
The companies also informed the premier bourse that they have no price sensitive information.
Ahsanul Islam Titu, president of the Dhaka bourse, said: “We are looking into the matter.” Investors should be careful about the unusual price hike of the low-cap companies, he added.
Source: The Daily Star
