The share price of Sonargaon Textiles, a company listed on the stock market, has more than doubled in a month with no specific cause. On Monday, the company’s shares again posted the day’s highest price gain on the Dhaka Stock Exchange (DSE), the country’s main bourse. Each share rose 10 percent, or 8 taka, to 87.5 taka on the day.
Following more than a month of continuous, unexplained and abnormal price increases, trading in the company’s shares was suspended immediately on the day. The DSE announced the decision while trading was under way. The DSE said the suspension for the rest of the day was triggered by the abnormal rise in the share price after trading opened.
According to DSE data, each of the company’s shares was worth 34 taka on the Dhaka market on May 10. At the start of trading on Monday, the price had climbed to 87.5 taka. Over that period, 23 trading days had elapsed. By that measure, each share rose by 53.5 taka, or more than 150 percent, in a little over a month. In other words, the share price more than doubled over 23 trading days. Against this backdrop, the DSE decided to halt trading on Monday.
The leadership of the Bangladesh Securities and Exchange Commission (BSEC), the capital-market regulator, changed on June 4. The government appointed Masud Khan as BSEC chairman and named three other commissioners. They took charge of the regulator the same day. On taking office, the newly appointed chairman, Masud Khan, told a news conference that day that the commission would take real-time action against market manipulators.
At the news conference, the BSEC chairman said manipulators would face stiffer penalties than ever before, and that these would be imposed in real time. He said Z-category companies would be placed under special surveillance from the outset to control manipulation, and that investor protection would remain at the center of all of the commission’s activities.
After taking charge, the newly appointed BSEC commission met the DSE’s board of directors and management. At that meeting, instructions were given to take immediate action over the shares of low-quality companies whose prices rise abnormally for no specific reason. Where necessary, trading in such shares should be suspended and the cause of the price rise investigated swiftly. Following the BSEC’s instruction, the DSE has been deciding to immediately suspend trading in the shares of low-quality companies that show abnormal price increases. As part of that, trading in Sonargaon Textiles was suspended on Monday. Earlier, on Thursday, trading in Shyampur Sugar Mills shares was also immediately suspended over an abnormal price rise, though the suspension was lifted on the next trading day.
Market participants said there is no logical reason for an abnormal price rise in low-quality company shares other than manipulation. There is therefore no alternative to taking some immediate measures to protect investors from such shares, they said.
Sonargaon Textiles, a textile-sector company, is loss-making. In the most recent July-March period it posted a loss of more than 50 lakh taka. In its latest financial year, ended in June last year, the loss was more than 2 crore taka. As a result, the company could not pay any dividend to shareholders at the close of the last financial year. The company is currently in the stock market’s ‘B’ category.
Listed on the stock market in 1995, the company is small in capitalization. Its paid-up capital is 26 crore taka, and it has more than 2 crore 64 lakh shares, of which more than 40 percent are held by its sponsor-directors. As a result, the volume of freely tradable shares in the market is low. Manipulators exploit this as an opportunity. With few tradable shares, manipulators buy a small number of shares and trigger abnormal price increases, they said.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report