Golam Mostafa Jibon: Allegation has been intensified that country’s stock market has now gone under the hands of gamblers that spoiling normal atmosphere and expanding risk.
According to the sources, Mithun Knitting and Dyeing (CEPZ) Limited has not paid any dividends to investors for the last four years. According to the latest published financial report, the company is in huge losses. However, the share price of this organization has increased by more than 200 percent in the last four months.
C&A Textiles is another company that has not been in production for a long time and has not paid dividends to investors. The company has not released any financial statements for four years. However, the share price of this company has increased by almost 300 percent in the last four months.
Not just Mithun Knitting or C&A Textiles, the share prices of many weak companies have risen at such an unusual rate recently. These included ICB Islami Bank, Fu-Wang Ceramic, Selvo Chemical, Anwar Galvanizing, GBB Power, Emerald Oil, Bangladesh National Insurance, National Feed Mill, Paper Processing and Packaging, Dhaka Dyeing, Fortune Shoes and many more.
Although, the share prices of these weak companies have risen abnormally, the prices of many companies are still low even after paying good dividends.
Even the price of someone company that pays 12 percent dividend has remained below of Tk 10. Of them, the price of Mutual fund is at the bottom level. The price of Green Delta Mutual Fund, which pays 12 percent cash dividend to investors, stands at Tk 8.70.
The price of mutual fund DBH First has stood at Tk 8.80after paying 13 percent cash dividend.
Similarly, the price of First Janata Mutual Fund, which pays 13 percent cash dividend, has fallen to Tk 9.20. EBL First, another mutual fund with a 13 percent cash dividend, is trading at Tk 9.60. Trust Bank First Mutual Fund, which pays 9 percent cash dividend, costs at Tk 7.40.
On the one hand, the share price of a weak company has risen abnormally, on the contrary it is unusual for the price of a company that has paid a good dividend to fall to the bottom, said stock market analysts.
They said that, now the stock market is mostly occupied and controlled by the gamblers. The prices of the institutions,where the gamblers are investing, are skyrocketing. As a result, ordinary investors are also investing in those weak companies in the hope of making more profit. They further said that, the current picture of the stock market is destroying the normal environment of the market and increasing the risk.
Ordinary investors, who buy shares of weak companies at extra prices in the hope of higher profits, can fall into losses at any moment. Therefore, the regulatory body Bangladesh Securities and Exchange Commission (BSEC) should increase surveillance in the interest of the overall market to keep the money invested by investors safe.
At the same time, if you see something unusual, you should take immediate action. Otherwise, the current development of the market may not be sustainable.
In their view, the overall share market is now quite conducive to investment, even though the prices of some weak stocks have risen abnormally recently. So investors should give up the greed for more profit and invest in good companies.
In this case, even if the share price of a good company goes down, there is nothing to worry about.
Because of good dividends may come from good companies at the end of the year.
A member of the DSE said, there is no such thing as fundamental in the market now. Everyone is watching now where the party. The price of shares which do not pay dividends and haveno on production for a long time, is skyrocketing. Besides, the share or unit price of a well-paid company is falling. That is why, a large section of ordinary investors are buying shares of weak companies in the hope of higher profits. This is not a good sign for the stock market at all.
He further said that, now who are playing with share in the market is an open secret. The regulator also knows who is playing with which shares. Everything is in front of the eyes of the regulatory body BSEC. But no visible steps have been taken to stop this. Although, some investors are able to make a profit temporarily, it is harming the overall market environment.
Mirza Azizul Islam, an advisor to the former caretaker government and former chairman of the Bangladesh Securities and Exchange Commission (BSEC) said, “The share price of a good company does not rise and the share price of a weak company rises abnormally. I can’t understand, why the investors are investing in weak institutions. Two days before or after – they will be beaten. Two days later when other investors realize that it is not sustainable, they will start selling and prices will fall. Then their capital will be lost.”
“Some shares may be under control of gamblers, but I don’t think the market is under the control of gamblers overall. It seems to me that the overall market situation is not a very worrying one. Because, the ups and downs of the market are not exaggerated,” he said adding that the BSEC and the stock exchange should look into why this is happening. At the same time, necessary steps should be taken in this case. Such margin loans can be reduced.
Abu Ahmed, a former professor of economics at Dhaka University and a stock market analyst, said that, “The money of investors now entering the stock market is between Tk 8 lakh and 10 lakh. They want to make a quick profit by buying low priced shares. Now these are being gambled with. Due to this, the share price of a weak, closed company increases. The share price of a good company does not increase as gamblers do not enter there.
He said, the share price of fundamental companies does not increase. They scoff at companies with fundamentals. Mutual funds have paid very good dividends, but this has no effect on prices. Throughout our lives we have learned that the stock price or share price is determined by the company’s earnings and what the company pays (what dividends it pays). Now they are not even close to the edge. It’s not a good sign for the market. This is not a sign of a healthy market. But, those, who are real investors, see the basics. They don’t invest for seven days.
Stock market analyst said, the shares of listed government good companies should be released to the market. At the same time, take initiative to enroll those, who are yet to get enrollment.
Owners of Sanofi and GlaxoSmithKline have left the country after selling their companies. We are trying to bring foreign investors. Faruk Ahmed Siddiqui, former Chairman of the Bangladesh Securities and Exchange Commissionsaid, “Most of the traders in Bangladesh’s stock market are not investors. This is why, they are not interested in dividends. Our traders are interested in the shares that will rise rapidly by manipulation.
He said, how much will the share price of a good company increase? This is highest 10 percent to 15 percent. The share price of a small company is going from Tk 10 to Tk 30. Prices are rising by three hundred percent. There is massive manipulation in the market all the time. These investors can buy low priced shares. They cannot afford to buy more shares. “The market is now dependent on gamblers, not real investors,” he said.
As a way out of this market situation, he said, investors need to give up the greed to make more profit in a short period of time. At the same time the quality of the regulatory body needs to be improved. If they (regulators) cannot stop manipulation then the market will continue like this.
BSEC Executive Director and Spokesperson Mohammad Rezaul Karim said, “We have been monitoring the recent rise in share prices of closed and weak companies. If there is any kind of manipulation, we will investigate and take action according to the law. However, if someone buys a share, we cannot interfere there.”
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