As the share prices of closed or non-operational companies in the stock market continues to experience abnormal rise, the fundamentally sound shares continue struggle to find buyers in the market, with shares of these companies remaining stagnant at floor prices despite positive surprises in dividends.
Market analysts are of the view that Bangladesh Securities and Exchange Commission (BSEC), the stock market regulator, has taken the initiative to relaunch various closed companies in the interest of investors of listed closed companies and to reorganise the board to prevent irregularities and corruption in those companies. It is around this positive initiative of the BSEC that the manipulative circle has become active.
However, the BSEC has denied the allegation of rigging. Officials of the BSEC have said that initiatives have been taken for the sake of investors to relaunch companies that have been closed for years and to restructure the boards of those companies.
In 2020, when the stock market was in turmoil, the current commission took over under the leadership of Professor Shibli Rubayat Ul Islam. Later steps were taken to revive closed or loss-making companies and reorganize the board, along with other initiatives. This has produced unexpected results for most companies.
Meanwhile, the BSEC has returned five companies from the OTC market to the main market. These companies are Bangladesh Monospool Paper Manufacturing, Tamizuddin Textiles, Monno Fabrics, Sonali Paper, and Paper Processing.
On the other hand, the BSEC has reorganised the board of directors for companies such as Imam Button Industries, Alhaj Textiles, Fu Wang Foods, Emerald Oil, Associated Oxygen, Agni Systems, C&A Textiles, Familytex, BD Welding Electrodes, First Finance, First Islami Life Insurance, and Ratanpur Steel Rerolling Mills.
Capital market expert Professor Abu Ahmed told The Daily Messenger, “The regulator’s intentions were noble. However, the manipulative cycle is making these changes an issue and driving the share prices abnormally high, which is then passed on to the investors.”
He also mentioned that some companies are partially coming into production and are manipulating the news of production to gather interest and fool investors.
According to market insiders, this manipulation circle makes decisions about dividends by sitting with the owners, changes the category by naming dividends, arranges to publish financial reports conveniently, and takes those shares into their own hands. They then spread different types of news in the market to attract investors, who then find themselves unable to sell shares purchased at high prices.
Furthermore, various manipulations are ongoing in the market, including increasing share prices by spreading rumours of changes in ownership of many other companies. For example, Rangamati Foods, an OTC company that has been closed since 2003, was found to have been bought by a group for just Tk 1 crore. Later, the company issued new shares worth around Tk 42 crore without taking any money to get listed on the SME Board of DSE. After this fraud was detected, DSE cancelled the application to return to the SME board.
In this regard, BSEC Chairman Professor Shibli Rubaiyat Ul Islam told the media that BSEC has already worked with 30-35 institutions. Of these, 15-20 have gone into production, and the rest are in the process of coming up. Those that have started production have also started paying dividends to investors. Companies had huge losses and are trying to overcome them as well.