Stocks continue to slide as manipulation dents confidence

Stocks have continued to lose value as the index and prices are falling every day.

The DSEX, the benchmark index of Dhaka Stock Exchange, fell 53.42 points or 1.12 percent yesterday, to finish the day below 4,700, a level unseen in three years.

Among many reasons, rampant manipulation of some stocks and erosion of money have hit investors’ confidence and portfolio badly, said a number of analysts and investors.

United Power Generation, Monno Jute Stafflers, Monno Ceramics, IFAD Autos, Sonar Bangla Insurance, National Tubes, Standard Ceramic and some junk stocks witnessed huge price fluctuations in the last few months only because of manipulation and rumours, said the analysts.

According to DSE data, stocks of Standard Ceramic rose to Tk 740 from Tk 144 within six months and then again fell to Tk 410 within only 10 days of trade.

Stocks of Monno Jute Stafflers also showcased surprising fluctuations rising to Tk 2,032 from Tk 687 within two months and then plunging to Tk 913 within one and a half months.

“Such fluctuations in stock prices within such a short time clearly indicate manipulation,” said a stock broker.

He said every brokerage house knows that these stocks face manipulation, yet those prevail. “People invest in the stocks despite knowing about the manipulation,” he added.

In early September, the stock market regulator identified some manipulators and forwarded their names to the legal department for punitive measures along with sending some stocks to the spot market.

In the spot market, shares trade on liquid money so people are discouraged from buying such shares.

Yet manipulation continued even after such steps.

Stocks of National Tubes rose to Tk 196 from Tk 122 between September 3 and October 10 without any valid reason, even after the company authority publicly urged for caution, saying that they had no undisclosed price sensitive information.

“Exemplary punishment is needed for the manipulators to curb manipulation,” said Abu Ahmed, a stock market analyst.

He said the Bangladesh Securities and Exchange Commission (BSEC) has the latest software to identify manipulators within a very short time, so it should stop them very early.  Accordingly, they should dole out very strict punishment to ward off others from engaging in manipulation, he added.

“In any manipulation process, only 5 percent of people gain money and the other 95 percent loses out, theoretically, so a huge number of people lost their money for the manipulation,” said a merchant banker.

He said rampant manipulation in the stock market led to the snatching of a huge amount of investors’ money, so they have become inactive now.

As stocks which had performed well remain frustrated with the prices, investors are rushing for manipulated stocks, he said, adding that there were many other reasons behind the market slide, including liquidity crunch.

In the last one month, the premier bourse lost over Tk 17,650 crore from its market capitalisation.

Turnover, another important indicator, rose by 19 percent to Tk 305.89 crore.

Of the traded issues, 57 advanced and 260 declined while 36 securities closed unchanged on the premier bourse. National Tubes dominated the turnover chart with transactions of Tk 15.33 crore, followed by Sonar Bangla Insurance, Standard Ceramic, Monno Ceramics and VFS Thread.

Standard Ceramic was the day’s best performer with a 20.34 percent gain while Salvo Chemical was the worst loser, shedding 33.60 percent.

Chattogram stocks also went down with the bourse’s benchmark index, the CSCX, decreasing 79.52 points, or 0.90 percent, to finish the day at 8,710.30.

Losers beat gainers as 175 declined and 63 advanced while 16 finished unchanged on Chittagong Stock Exchange. The port city bourse traded shares and mutual funds worth Tk 13.67 crore.