A section of investors, mostly retailers, lose their fund as share prices of almost all the newly-listed companies plunge within few days after skyrocketing on their debut.
Experts said that due to small paid-up capital of the newly-listed companies, in most of the cases, it had become easy for manipulators to gamble to make quick return.
They also said that in most of the cases, abnormal price movement of such companies were not logical considering the fundamentals of the companies.
On the other hand, investors are buying the shares of newly-listed companies at high prices without considering earning per share and net asset value per share of the newly-listed companies, they said.
Experts said that was why some investors were losing their money by investing on such stocks.
Of 14 newly-listed companies under the ‘N’ category of the Dhaka Stock Exchange, 13 companies witnessed plunges in their share prices after abnormal rise in first few days of their debut trading.
The prices of the shares of Khulna Printing rose by 371 per cent on its debut to Tk 37.10 compared to the issue price of each share of Tk 10, but price of the company’s shares subsequently declined to Tk 23.50 on October 2.
Liakat Ali, an investor, said that he bought some shares of Khulna Printing at Tk 34.20 each, since then the share prices of the company was on decline.
The shares of Appollo Ispat Complex increased to Tk 40.80 in just 14 days of its debut in December 24 last year, but had failed to sustain the price and subsequently declined to Tk 25.60.
The shares of the company were issued at Tk 22 each.
The share prices of Mozaffar Hossain Spinning Mills skyrocketed by 453 per cent to Tk 45.30 in its debut trading. The issue price of the company’s shares is Tk 10.
But, its shares were last traded at Tk 22.30 on October 2.
Emerald Oil Industries, Far Chemical Industries, Far East Knitting and Dyeing Industries, Hwa Well Textiles, Matin Spinning Mills, The Peninsula Chittagong, Ratanpur Steel Re-Rolling Mills, Saif Powertec, Shurwid Industries and Tung Hai Knitting & Dyeing are the other newly-listed companies which witnessed sharp fall in their share prices after skyrocketing in first few days of their debut.
On the other hand, the trading of another company — Shahjibazar Power Company — was under suspension for last two months due to a abnormal rise in its share prices after enlistment despite having no reason disclosed so far.
The share prices of Shahjibazar skyrocketed to Tk 89.20, more than three times of its issue price, before the DSE suspended its trading on August 11.
The shares of the company were issued at Tk 25 each.
Former Bangladesh Securities and Exchange Commission chairman Farook Ahmed Siddiqui, said, ‘There might be two reasons. One was the craze among the investors to buy newly-listed companies’ shares without considering fundamentals of the companies to get quick return. In that case investors should have the knowledge to judge the fundamentals of a company.’
‘The second reason might be manipulators’ role. It may be the manipulators who are plying the main role behind abnormal price hike of newly-listed companies’ shares,’ he said.
The former BSEC chairman also said, ‘Whatever the reason is, the regulator should look into the matter. If it is the manipulators, then they should be punished.’
AIMS of Bangladesh managing director Yawer Sayeed said, ‘When a company offers its shares at face value, investors become crazy to purchase the shares. On the other hand, when a company with better fundamentals gets regulatory approval with premium, investors say it [giving premium] unjustified.’
This tendency of investors is contradictory, he said.
If investors lose their fund by investing on newly-listed stocks without considering fundamentals of the companies, they have to take the primary responsibility in that case, Yawer said.
There might be rumours, but they have to be careful while making investment decision, he said.
-With New Age input
