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The share price of Savar Refractories, a junk stock, is rising 'abnormally 'despite the company is incurring losses and not giving any dividends for many years.
The stock price of the loss-making company, listed with the stock market in 1988, jumped over 50 per cent in a month to close at Tk 258.20 on Thursday.
All financial indicators of the company such as earning per share, net operating cash flow per share and net asset value per share are negative.
The company has reported net loss of Tk 738,184 for July-December 2021, as against loss of Tk 612,832 for July-December 2020.
Savar Refractories incurred a loss of Tk 0.53 per share for July-December 2021, as against loss of Tk 0.44 per share in the same period a year earlier, according to the Dhaka Stock Exchange.
In spite of poor performance, its unusual price movement prompted the DSE to serve show-cause notice on the company whether there was any price sensitive information for unusual price hike.
The company, however, informed the premier bourse on Wednesday that there is no price sensitive information for recent unusual price hikes.
Market insiders blamed price manipulation due to a small volume of shares behind the artificial crisis.
"The company's paid-up capital is very low, making it a target for gamblers seeking to manipulate trading," said a merchant banker preferring anonymity.
Its paid-up capital stands at Tk 13.93 million while the total number of securities is 1.39 million.
Some companies with low performance records also made their way into the top gainers' list of the DSE frequently, riding on a rumour that the investors are putting money in the securities.
"The influential investors by disseminating rumours are trying to manipulate the prices of shares of many companies to make quick-profit," said an analyst at a leading brokerage firm.
He said the investors are chasing these stocks without conducting any proper analysis, as they see continuous rise in values.
"If these stocks face corrections, general investors will be the ultimate losers, which will dent their confidence," he said.
He noted that investors should be careful about the unusual price hike of the low-profile companies and they do not pay any heed to rumors at the time of trading shares.
Senior executives of the company could not be reached over the telephone.
An official of the Bangladesh Securities and Exchange Commission (BSEC) said they are looking into the matter and the investors should also be careful about the unusual price hike of the low-profile companies.