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The Financial Express

Two life insurers' shares keep surging sans PSI

| Updated: January 21, 2022 10:07:12


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Shares prices of two life insurers-- Fareast Islami Life Insurance and Prime Islami Life Insurance--are soaring abnormally despite no undisclosed price sensitive information (PSI).

Within a month, the Fareast Islami Life Insurance share price jumped over 134 per cent while share price of Prime Islami Life Insurance soared by 57 per cent riding on speculation.

The scam-hit Fareast Life Insurance is witnessing an unprecedented price hike and increase in volume of shares in recent weeks without any valid reason.

Within a month, the Fareast life insurer's share price rose 134 per cent or Tk 66 each to close at Tk 114.40 on Tuesday.

The life insurer's share price was Tk 48.90 a month earlier on December 19, 2021. Its shares traded between Tk 36.10 and Tk 114.90 in the last one year, according to Dhaka Stock Exchange.

The DSE served show-cause notice on the company recently following its 'abnormal' price hike.

Even after being served show-cause notice, the company's share price has not stopped rising and soared about 9.47 per cent further on Tuesday.

According to media reports, the Fareast Life Insurance allowed its former chairman and directors to commit serial financial crimes and siphon off policy holders' funds worth more than Tk 21 billion between 2010 and 2020, found a special audit recently.

The directors embezzled the funds by showing manipulated prices while buying land, investing in their own companies and providing advances to fraudulent cooperatives, the special audit found.

The audit was commissioned by the stock market regulator after receiving allegations that the life insurer has failed to meet customers' claims and matured policyholders' payments.

The securities regulator in September last restructured the Fareast Life board by appointing 10 independent directors, after receiving a primary audit report.

Investors are blindly rushing towards its stock without conducting a proper analysis when they see the rise in values, said a merchant banker.

The company's share price is rising fast despite the scam news and the regulator should investigate whether there are any wrongdoings from manipulators, he said.

"If this stock faces correction, general investors will be the losers, which will dent their confidence," he added.

On the other hand, share price of Prime Islami Life Insurance also rose more than 57 per cent or Tk 32 each in a month to close at Tk 89.20 on Tuesday.

Following the 'abnormal' price hike, the DSE served show-cause notice on the company on Tuesday.

The company, however in a knee-jerk response, informed the DSE that there is no undisclosed price sensitive information of the company for recent unusual price hike.

Even after being served show-cause notice, the company's share price has not stopped rising and soared 9.85 per cent further on Tuesday.

Some influential investors by disseminating rumours are trying to manipulate the prices of shares of many companies, said a stockbroker.

The investors should be careful about buying overvalued stocks in order to avert any misfortune, he said.

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