The Dhaka Stock Exchange (DSE) management and the regulator- Bangladesh Securities and Exchange Commission (BSEC) are consistently failing to stop unusual rise in share prices of some companies despite strong surveillance supposedly watching trading on the floor.
SEC’s failure is noticeable and yet the government is not bringing change at the top of the regulatory body or change in the method of its surveillance and enforcement of law to bring the speculators not unknown to the intellengce and the regulators.
The government desired nominees at important posts is the number one bottleneck to establish discipline in the market. The regulator sometimes fines the manipulator company but it is too small to force the violator to abandon wrong doing and be compliant.
The unusual spiraling of the share price of Bangladesh Submarine Cable Company Ltd in recent time came as the latest shock to people watching the market. It rose 108 per cent in three months from Tk 91.70 each in November 25 to close at Tk 176.20 on Sunday last week.The Chittagong bourse directly follow events in Dhaka bourse spreading the market chaos.
Such unusual price hike is often robbing small investors and opening ways for company directors – mainly small cap registered companies – with DSE to make huge illegal fortune.Allegations galore that manipulators are at work under the nose of the regulators.
At least 20 such companies have been detected over the past several months. DSE Chairman Prof Abul Hashem agreed last week that such wrong doing in the bourse is taking place occasionally and over the recent past they have delisted four companies from trading while 11 more may be delisted soon or sent to OTC market meaning they can’t engage in regular trading.
Earlier Monno Jute Stafflers, BD Autocars and Legacy Foot were sent to OTC on charge of price manipulation sending their share price sky rocketing. Monno Ceramics, Key&Que, Aziz Pipes, Style Craft and Dragon Sweater were also sent to OTC market on similar allegations.
DSE chairman said investors’ awareness is essential to avoid taking part in such manipulative trading. But many believe the bourse management is totally failing to enforce discipline as sensitive financial body while trying to pass blame on investors.
DSE chairman said on their part they can at best delist the companies and BSEC can take more punitive actions which they are recommending to the regulator.
Recently DSE served show cause on Bangladesh Submarine Cable Co Ltd on January 21 as to why the price hike continued but the company denied any undisclosed price sensitive information they have to cause such unusual price hike.
Earlier, in July last DSE delisted Rahima Food Limited, and Modern Dyeing and Screen Printing Limited, as their share prices continued to surge abnormally despite they were not in business.In August DSE also decided to take punitive measures against 15 companies. They include Meghna Pet Industries, ICB Islamic Bank, Dulamia Cotton Spinning Mills, Samata Leather Complex, Shyampur Sugar Mills, Zeal Bangla Sugar Mills.
The list continues: Imam Button Industries, Meghna Condensed Milk Industries, Kay & Que (Bangladesh), Savar Refractories, Beximco Synthetics, Jute Spinners Ltd, Shinepukur Ceramics, Sonargaon Textiles and Information Services Network Ltd.
Share price of Monno Jute Stafflers continued to soar unusually in June last year despite formation of a committee to conduct an investigation. The company management said they have no undisclosed sensitive information, except a rise in paid up capital to Tk 100 crore from Tk 10 crore that can’t however justify 373.38 percent rise in price.
Price-wise it beat companies like Berger Paints, Bata Shoes, Renata, Marico Bangladesh, GlaxoSmithKline and Reckitt Benckiser. Many companies under Z categories are involved in the wrong doing while some others listed in A and B categories are also are also blamed for wrong doing.
Thursday, September 05, 2019
