Photo: Messenger
Capital market manipulators have adopted a new strategy, now targeting shares of debut companies, particularly those with unproductive and weak foundations. This shift in tactics has seen manipulation aimed at four out of the five companies that made their debut this year.
Data from the Dhaka Stock Exchange (DSE) reveals that these manipulators have withdrawn hundreds of crores of taka from investors by artificially inflating share prices by two to five times within a mere two to three weeks post-debut or listing. The affected companies include Asiatic Laboratories Limited, Best Holdings Limited, Sikder Insurance Company Limited, and Web Coats PLC.
Investors and capital market stakeholders complain that various irregularities have been detected in these companies before the initial public offering (IPO). Capital market regulator Bangladesh Securities and Exchange Commission (BSEC) has also fined the companies.
Still, the share prices of these controversial companies have risen sharply since the day they were listed. The shares of these companies with weak fundamentals are being increased through manipulation. Company authorities, issue managers and investors are alleged to be involved in this manipulation.
Capital market expert Professor Abu Ahmed told The Daily Messenger that there are some irregularities in all the companies that have come to the capital market this year. After these companies are listed, the share price is being increased in connivance with the company.
According to information, Asiatic Laboratories Limited was listed on Dhaka Stock Exchange (DSE) in Pharmaceuticals & Chemicals sector in March this year. Then trading started on March 6. With a face value of Tk 10 and a premium of Tk 10, the transaction starts at Tk 22. The share price rose by Tk 16.80 or almost doubled in a week to trade at Tk 38.80 on March 14.
In this regard, Company Secretary, Ishtiaq Ahmed told The Daily Messenger, “Our company is good enough, investors are driving up the share price. No one from the company is involved in increasing the price.”
Another controversial company is Best Holdings Limited. Shares of this company were listed in the first week of February this year. The first trading of shares of Tk 24 with premium started on February 6. The share was traded at Tk 26 that day, just a week later on February 14 it traded at Tk 43.1. That is, the price of the share increases by Tk 17.10.
The company, which raised Tk 350 crore from the capital market through IPO, has been accused of understating the unusual building construction cost, understating the depreciation charges, unimaginable land development costs and overstating the assets. For these reasons BSEC canceled the IPO without initially approving it. Later they lobbied for IPO approval.
The share price of this controversial company has also been inflated by the manipulation of the company authorities and a group. When asked about this, the company secretary of Best Holdings Limited, Abul Kalam Azad told The Daily Messenger that the company authorities did not help in increasing the share price. Investors are buying shares because of the value of the company, which is why the share price has increased.
Also, for no reason, the share price of Sikder Insurance Company Limited increased by 4 times just in the clutches of the manipulators. Shares of the insurance company with a face value of Tk 10 started trading at Tk 11 on January 24. This share was last traded at Tk 49.3 on February 15. That is, the price of the share increased by Tk 37.30 in two to three weeks of listing.
In addition to the main market, manipulation is also taking place in the SME sector companies. The shares of Web Coats PLC have been listed in this market on March 11. The company’s shares, which started trading at Tk 11, were last traded at Tk 14.6 on March 14. That is, the price has increased by Tk 3.6 in three working days.
Capital market analyst Al Amin told The Daily Messenger that the issue managers work behind bringing the debut company to the market. It is the issue managers who drive up share prices through manipulation.
Pointing out that the issue manager was involved in the manipulation of the shares of Best Holding Limited, he said that on February 14, the total shares of the company were sold for 2.56 crore. Out of this, institutional investors took profit by selling 2.30 crore shares at Tk 42.30. And those who bought the shares because it will go for Tk 100 are now suffering, he added.
When asked, Executive Director and Spokesperson of BSEC Mohammad Rezaul Karim told The Daily Messenger that the price of shares of companies coming to IPO usually increases for the first few days. Because investors don’t know how much the company’s shares should go up to. He said, if there is manipulation in the shares of the newly listed company, then legal action will be taken.
Messenger/Sajib
