16 days ago

Abnormal share trading

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As the country's main bourse, the Dhaka Stock Exchange (DSE), is in a moribund state, some small-time manipulators have turned the trading platform into a gamblers' den. That some people are engaged in wrongdoing is now clear from a notable rise in prices of shares of some listed companies that are closed for months or in the red for years together. A leading vernacular daily late last week published a report that elaborately explained how manipulative transactions involving some junk shares are being carried out at the DSE. 

For instance, Shympur Sugar Mill is one of the six state-owned sugar mills that are not in operation since 2020 as per a government order. The sugar mill, a loss-making entity, could not pay dividends to its shareholders for many years. Yet its share price increased by 200 per cent in the past six months. The shares of the sugar mill having a face value of TK 10 each are now being traded at Tk 236. In another identical case, shares of Khulna Printing and Packaging recorded a 125 per-cent rise in the last six months. The company has been limping since the regulatory body concerned froze the bank account of its owner for alleged irregularities. Khulna Packaging also could not offer any dividends to its shareholders since 2020. 

What has been reported in the Bangla contemporary is nothing unique. Such manipulative trading with junk shares has been going on for years. Besides, a sudden jump in share prices of some listed companies without any price-sensitive information (PSI) is also a common occurrence at the bourses. The companies concerned issue clarification on being asked by the securities regulator. Such suspicious transactions are the handiwork of a small group of people who allegedly target one or two issues at a time and raise their prices under a well-knit plan. The objective is to lure some unsuspecting investors to step into their trap. The intensity of devising such unscrupulous schemes increases when the market is dull and drab. The situation in the bourses now is suitable for executing such evil designs. 

A few statistics relevant to the market will help explain the situation better. The main index of the country's premier bourse now revolves around 6,200-mark with a daily turnover hovering around Tk 3.0 billion. Sadly, the DSE which had witnessed a few rallies even during the pandemic now wears a desolate look. The situation is so bad that the securities regulator has decided against a lift to the floor price for fear of ending up in a greater crisis. The Bangladesh Securities and Exchange Commission (BSEC) is aware of the negative impact of keeping in place the floor price for an indefinite period. Yet it is sticking to it, creating deep frustration among investors who have got their money stuck in stocks. The current state of affairs with bourses is unnatural, and it does not help the cause of investors. The authorities concerned should allow the market to move naturally, taking cues from the ongoing macroeconomic developments. Otherwise, manipulators will rule the roost, and genuine investors will continue to leave the market. Some of them may never return.

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