Stocks of weak firms soar on manipulation

Stocks of the companies with sub-par performance are rising on the Dhaka Stock Exchange at a higher rate although the key index has been bearish for months, prompting industry people to point their fingers at manipulation. 

The DSEX, the benchmark index of the premier bourse of Bangladesh, went up 15 points, or 0.24 per cent, to close at 6,241 yesterday. The index added 93 points in the past three trading days.

But the stocks of companies with poor financial records have been rising consistently for the last couple of months, even when the DSEX has dropped for the ongoing volatility at home and abroad. This is solely the result of manipulation, said a stockbroker.

A vested quarter has sent the price of the stocks higher on completing purchases, he said, adding that rumours have also played their part.

"There has been little initiative from the stock market regulator to prevent the malpractice, so such tendencies are deepening in the market," he alleged.

Anlima Yarn Dyeing topped the gainers' list yesterday, rising 9.81 per cent. For its failure to pay at least a 10 per cent dividend, the company has remained in the B category.

Sunlife Insurance and Desh Garments, both B category firms, rose 7 per cent and 6 per cent respectively.

Other companies with poor performance were on the list of top gainers almost every day whereas financially sound companies are struggling, the stockbroker said.

Responding to the allegation, a top official of the Bangladesh Securities and Exchange Commission said the regulator monitors trading regularly and it has warned that it would take stern measures against any illegal practices.

Turnover on the DSE advanced 12 per cent to Tk 1,159 crore yesterday. Of the securities, 156 advanced, 132 declined, and 92 remained unchanged.

A merchant banker, preferring anonymity, said the stock market was becoming an attractive place for carrying out manipulation. And most of the securities are rising only because of malpractices.

"This is not a good sign for the market. General people also keep themselves away from the market seeing such manipulation," he said.

"How can a stock that struggles to provide dividends rise regularly?" he asked.

Tamijuddin Textile Mills shed the most on the day, eroding 4.52 per cent. Premier Leasing and Finance, Popular Life First Mutual Fund, Malek Spinning Mills, and Phoenix Finance also suffered significant losses.

Beximco Ltd was the most-traded stock, with shares worth Tk 81 crore changing hands, followed by Fortune Shoes, LafargeHolcim Bangladesh, Malek Spinning Mills, and IPDC Finance.