Regulatory body inactive
Mahfuja Mukul: The maneuvering cycle has become reckless in the country’s stock market once again. This cycle is artificially inflating the share price of one company after another and grabbing huge amount of money. However, no visible steps have been taken by the Bangladesh Securities and Exchange Commission (BSEC), the regulator of the capital market, to stop this cycle of violence.
Analysts say the rise in the share price of some companies in the stock market suggests that the price has been raised through manipulation. The share price is being increased by spreading inflated information. The regulatory body has not been able to stop this manipulation. The regulatory body is playing a passive role in stopping the manipulation. BSEC did not take necessary steps to stop the manipulation.
Bangladesh Shipping Corporation is currently the most talked about company in the stock market.
In just 17 working days, the company’s share price has risen 180 percent. In other words, in 18 working days Tk 100 profit Tk 180. On December 23, the company’s share price was Tk 49.40. Which has risen to Tk 138.30 paise at the end of the January 24 transaction.
The trend of abnormal rise in the share price of the company started after the publication of the financial report for three months from July to September 2021. The company released its financial report on December 26. Since then, the company’s share price has been running like a crazy horse. Listed on the stock exchange in 1986, the company’s share price has never reached such a high level before.
Fareast Islami Life Insurance is another company whose share price has risen abnormally. The share price of this life insurance company has risen 115 percent in 12 working days. On December 29, the company’s share price was Tk 50.10. From there, the price of each share has risen to Tk 106.80.
Such an increase in share price has led to unprecedented looting in the company. In view of this, the board of directors of the company has recently been dissolved by BSEC, the regulatory body of the capital market. Besides, 10 independent directors have been appointed in the organization. On the other hand, the Insurance Development and Regulatory Authority (IDRA), the regulator of the insurance sector, has fired Hemayet Ullah from the post of Chief Executive Officer (CEO) of the company on charges of corruption and irregularities.
Not only this company, but also a number of companies listed on the stock market have recently seen their share prices rise dramatically. The rise in the share price of these companies is mainly due to the strategy of manipulating the profits of the manipulative cycle. And despite the abnormal rise in share prices, a section of investors are buying shares of these companies as the regulator has not taken effective action. Some of them are making a profit, while others are facing huge losses.
Shares of Lavelo Ice Cream, Fortune Shoes, One Bank, Meghna Life, Titas Gas, Asia Insurance, Malek Spinning, Sonali Paper, Keya Cosmetics, RAK Ceramics and several others have risen artificially in recent times. It has been alleged. The names of some of the investors behind the increase in the share price of these companies are circulating among the investors of the brokerage house
Earlier, these same investors had raised the share prices of several insurance companies in 2019 and 2020 and made huge profits.
Before raising the abnormal price of the shares, these investors first took advantage of the significant share strategy of the company concerned. After coming under their control, the trend of rising share price started. As prices continue to skyrocket, at one-point ordinary investors buy shares of companies that have artificially inflated prices in the hope of making extra profits. And in the buying of shares of ordinary investors, the investors who have played a role in raising the price fall into the trap.
The share price of One Bank doubled between November 8, 2021 and November 30, 2021. One of the most talked about investors in the stock market is currently playing a key role in raising the share price of the bank. On November 8, the share price of One Bank was Tk 12.40, from here the price of each share rose to Tk 20.10 on 30 November. Then, from December 6, the discussed investor started selling huge number of shares of the bank.
As a result, on December 19, the share price of One Bank dropped to Tk 13.80. As a result, ordinary investors who buy shares of the company for Tk 18-20 incur huge losses.
A member of the Dhaka Stock Exchange (DSE) said, “It is an open secret which company’s shares are rising in the market now. As a result, a large number of ordinary investors are buying these shares without any discrimination in the hope of extra profit. Some of them are looking at profit, while others are counting losses.’
He added, “The way in which the share prices of various companies are being raised now is destroying the normality of the market. The stock market has now become an item market instead of an investment. The price of the company that the investors are buying is skyrocketing. If this situation continues, the market base will be weakened.
Dr AB Mirza Azizul Islam, an adviser to the former caretaker government and former chairman of the Bangladesh Securities and Exchange Commission told: I would say, it’s unusual. There may be manipulation behind this. But why do ordinary investors fall into that trap?
He said, “It has been said many times that ordinary investors should carefully review the overall issues before buying shares of a company.” One bought and a hundred investors started buying behind him, and the price went up. This is not the responsible behavior of investors. However, the BSEC should look into whether there is any manipulation behind the rise in share price and if any evidence of manipulation is found, legal action should be taken.
Faruk Ahmed Siddiqui, another former chairman of BSEC, told, “It is understood that prices are being increased through manipulation. Manipulation regulators are unable to stop. Regulators are responsible for failing to close, and investors are equally responsible. Manipulators are raising share prices by spreading good news.”
He said, “I am not saying the name of a single company, it is the overall market (raising the share price abnormally by spreading the good news of the company). I would say the regulatory body is inactive. They did not take the necessary steps to stop the manipulation.”
Mohammad Rezaul Karim, executive director and spokesperson of BSEC told, “The price of securities depends on demand and supply. It is not the job of the regulatory body to determine the share price of a company. However, our surveillance team is regularly monitoring whether there is any irregularity in the transaction. If there is anything suspicious, the commission investigates it. If the investigation reveals information about insider trading or irregularities, the commission will take action according to the law.”
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