Prices of some fundamentally weak and small-capitalisation companies skyrocketed at the Dhaka Stock Exchange in the last few weeks, making market operators and experts worried.
Experts said the recent increase in the share prices of some small-capitalisation company and the companies with poor financial performance was not a good sign for the market.
If this short of irrational increase in the share prices of the companies continues for some more days, investors will have to suffer for it, they said.
They said that both the bourses and the stock market regulator should handle strictly the situation to save the market and investors from another mishap.
‘In recent times the movement of the prices of some companies is not matching with their financial performances. The situation indicates that the market is moving by rumour-based trading,’ IDLC Investments managing director Moniruzzaman told New Age.
He said such trend was not a good indication and investors should come out of such practice.
The share price of Bangladesh Shipping Corporation increased to Tk 698.25 on Wednesday from Tk 191.25 in April this year.
According to its last audited financial statement, the price earning ratio of the company stood at 365.25, while the company is having a negative reserve and surplus of Tk 132.80 crore.
The share price of CVO Petrochemicals, which has face value Tk 10, increased by Tk 346.40. The price of the share was Tk 89.6 in April which increased to Tk 436 on Thursday.
The price earning ratio of the company stood at 347.87 based on continuing operation.
The paid-up capital of the company is Tk 18 crore, while the reserve and surplus is Tk 2.16 crore.
The share price of CVO Petrochemicals, previously known as Chittagong Vegetable, during a bubble-burst in 2010 increased to Tk 6,000 from Tk 32.
The share price of JMI Syringes and Medical Devices, a newly-listed company, increased to its highest level in the last 15 trading sessions.
The share price of the company increased to Tk 133.5 on Thursday after starting with Tk 35.5 on June 19 this year.
The price earning ratio of the company stood at 417.19. The paid-up capital of the company is Tk 11 crore.
Savar Refractories and MIDAS Finance, companies under the ‘Z’ category, were among the most advanced 20 shares in June.
‘Some people always try to gamble at the stock market and that’s why we need a regulator to identify them,’ Osman Imam, who teaches finance at Dhaka University, told New Age.
‘If the regulator trains the operators in the use of its new surveillance software, the software could be able to bring better output in finding irregularities,’ he said.
Osman said the market had taken some baffling ups-and-downs after launching the new surveillance software by the regulator. ‘But, we haven’t seen any action yet,’ he said.
Investors should always be careful about share price rise without any reason, Osman said.
No regulatory action was seen taken by the Bangladesh Securities and Exchange Commission since the launch of the new surveillance software, with the finance of Asian Development Bank. The software is capable to find out different trade-related anomalies automatically.
The ADB recently expressed its dissatisfaction at the use of the surveillance software as no major market anomaly could be detected yet by the regulator.
-With New Age input
