Prices of some shares in the capital market rose abnormally in the past one year, mostly in the insurance sector, despite lacking strong company fundamentals.
Prices of some of these shares even rose ten times indicating of manipulation by certain quarters.
Analysts say there’s no doubt that the price hike is caused by manipulation. In the last few days, chief executives of several brokerage houses and several former directors of DSE have expressed their concern over the way the share prices of some companies are being manipulated.
Former BSEC chairman Farooq Ahmed Siddiqui said, ”There is no logical reason for a company’s share price to rise 10 times in one year and 7 times in 6 months. They must have been manipulated. Manipulation increases when the market goes peppy. The current regulatory body is doing a fine job. But they should be more pro active in stopping manipulation.”
The companies, whose share prices rose abnormally, should be investigated swiftly and the culprits involved should be brought to justice, he added.
On 9th June last year, the market price of Prabhati Insurance’s share was 19.40 taka. In a span of one year, it has increased 10 times on Tuesday to 191 taka. Share prices of this company were 70 Tk until March this year. Within three months, it is now climbed to 200tk.
On April last, Dhaka Stock Exchange (DSE) sent a letter in asking the company reasons for the unusual rise in share prices. In response, the company said it did not know the reason for the price increase. However, the owners of the company were benefited as their share prices also increased 10 times within one year.
On May 2, share price of NRB Commercial (NRBC) Bank was 12 taka. That price has tripled in a month climbing at Tk 38.40 till Tuesday.
NRBC shares have risen the most during last month in the Dhaka stock market. Of the 31 banks currently listed on the stock exchange, only two have higher share prices than NRBC. These two banks are BRAC and Dutch-Bangla. The share prices of 27 banks, comprising first, second and third generation banks, is lower than that of NRBC. Some of the notable banks are City Bank, Eastern bank, Mutual Trust Bank, Bank Asia and Trust Bank. Shares of these banks are being traded for more than a decade. NRBC, which was approved as a fourth generation bank in 2013, was listed on the stock exchange on March 22.
Dhaka Dyeing has not paid any dividend to its investors since 2015. This is why the company is classified as ‘Z’ as a poor quality company. Magically, the company’s shares hiked to 17 tk from 3 within one year. The price has increased by 438 per cent or 5 times. Despite this unusual price increase, there is no investigation. As a result, abnormal rise in prices continues. Each share of the company got a rise of as much as 2 percent on Tuesday.
For more than a year now, manipulation of shares of some companies in the insurance sector and other sectors has been a topic of serious discussion in t5he stock market. From investors to market-related parties, all concerned are extremely upset and angry with the current situation. Questions have been raised on the role of Bangladesh Securities and Exchange Commission (BSEC) as no visible steps were taken by them to regulate the frequency.
Although the stock exchange and the regulatory body have spoken about the necessity for an investigation into the manipulation of shares in the insurance sector, no official investigation has taken place so far.
BSEC spokesperson and executive director Mohammad Rezaul Karim said, “Our enforcement department has received some investigative reports on a number of companies, including insurance companies sent by the stock exchange. Apart from this, the regulatory body has also collecting information on those involved in the matter. Necessary action will be taken if anyone found to be violating the law.”
In addition, the market supervision has been increased to prevent manipulation, he further said.
