The share prices of a number of fundamentally poor stocks, known as junk stocks, at the Dhaka bourse have been surging in recent weeks on various rumours ahead of their financial disclosures.
Stock market experts said investors’ rumour-based investments and negligence in making investment decisions were major reasons for the abnormal hike in prices of junk stocks.
Lack of effective regulatory action against manipulators and rumour-mongers also contributed to the unusual hike at the stock market, they said.
Share prices of Modern Dying soared by 21.67 per cent in the last two weeks and on Thursday the company shoot up by 8.66 per cent to settle at Tk 224.6 despite the company declared 8 per cent dividend in the last two years.
Savar Refrigerator, a z- category scrips, surged 20 per cent in last two weeks and 6.54 per cent in last two days to close at Tk 92.8 on Thursday.
Rahima Food surged 8.74 per cent during one month while its share was selling Tk 149 on 21 September and it surged further to close at Tk 176.7 on Thursday.
The company declared no dividend since 2014 and its total loss stood at Tk 15.41 crore in December, 2016.
In response to a Dhaka Stock Exchange query dated October 04, 2017, the company informed that there was no undisclosed price sensitive information of the company for recent unusual price hike.
Kay & Que, Beach Hachary and Emareld Oil also increased in recent days despite going through a tough stage in earnings.
Emarald Oil surged 6.04 per cent in last week, closing at Tk 19.3.
Gemini Sea food was on top surge in share prices of 68.9 per cent in last one month and 65 per cent on Thursday as the company declared 123 per cent stock dividend.
Rangpur Foundry, RD food, Fine Food and Fu-Wang Food surged, 25.81 per cent, 12.27 per cent, 5.91 per cent and 4.14 per cent in the last two weeks with a hope of better financial disclosure.
Another company, Imam Buttons, increased 3.88 per cent in the last three days and the company declared no dividend with loss of Tk 0.38 earnings per share for the year end in June, 2017.
Although Fine Food and Fu-Wang Ceramics were struggling in doing business, their share prices also noticed hype in recent times.
Although the capital market investors suffered a lot due to market crash incidents, they are yet to learn the lesson,’ former interim administration adviser AB Mirza Azizul Islam told New Age.
‘There was no logic in the investors’ decisions to invest funds on such fundamentally poor companies,’ he said.
Although the BSEC formed investigation committees on many occasions, the findings of most of the committees remained undisclosed.
In August, the Bangladesh Securities and Exchange Commission had formed an inquiry committee to look into the unusual price hike of shares of newly listed BBS Cables Limited, an associate company of Bangladesh Building Systems Limited, another listed firm.
The share prices of BBS Cables which were issued at Tk 10 each through an initial public offering still remained up, surging 8.72 per cent in the last two weeks.
In September, Bangladesh Securities and Exchange Commission formed an investigation committee to probe into the recent unusual price hike of shares of Monno Ceramic Industries.
The share prices of the company still continued to surge by 17.84 per cent last week.
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