Six stocks under scanner as BSEC flags unusual price spikes

Infographics: TBS

The Bangladesh Securities and Exchange Commission (BSEC) has directed an investigation into the unusual rise in share prices and trading activities of six listed companies in the stock market.

The companies are Sonargaon Textiles, Shyampur Sugar Mills, Bangladesh National Insurance Company, Nahi Aluminum Composite Panel, Regent Textile Mills, and Al-Madina Pharmaceuticals Limited.

According to the BSEC, the share prices of these companies have increased abnormally without any disclosed price-sensitive information (PSI). At the same time, the companies have also failed to provide any satisfactory explanation to the stock exchanges regarding the sharp price movements. The investigation has been initiated to protect the interests of general investors.

The probe will examine whether there was any coordinated market manipulation or abnormal trading activity among investors, as well as whether any insider trading occurred using undisclosed price-sensitive information.

It will also verify whether stock brokers, stock dealers, and their authorised representatives (ARs) properly followed margin rules and regulatory instructions. The role and possible involvement of intermediaries in suspicious transactions will also be reviewed.

Any violations of securities laws and other irregularities will also come under scrutiny, the regulator said.

The Dhaka Stock Exchange (DSE) has been instructed to submit a full investigation report within 30 working days from the date of the directive.

At the same time, the regulator has instructed brokerage houses' ARs, compliance officers, and CEOs to strengthen awareness and compliance practices.

BSEC Executive Director and spokesperson Abul Kalam told The Business Standard that unusual price increases and abnormal trading activities were observed in these companies. However, the companies could not provide any explanation for the surge. Prioritising the interests of general investors, the BSEC has directed the DSE to investigate the reasons behind the price and trading anomalies.

Earlier, trading of two of these companies was temporarily suspended by the stock exchange. The BSEC said that if any irregularities are found after the report is submitted, appropriate legal action will be taken.

Regent Textile Mills Limited has come under renewed attention due to an unusual rise in its share price and trading activity. Although the company's business operations have remained closed for the past four years, its share price has increased sharply, raising concerns among investors.

According to DSE data, the company's share price rose significantly over the past two months. On May 18, the price was Tk4.30, which increased to Tk7.90 by 15 June, marking a rise of about 83.72%. Later, it corrected and fell 8.82% to Tk6.20.

However, no price-sensitive information (PSI) or business development announcements were made by the company, making the surge more suspicious.

A DSE inspection team visited the company's factory on 26 September, 2023, and reported that production was completely shut down.

The company has not paid any dividends to shareholders since 2021. Founded in 2006, Regent Textile Mills Limited is a 100% export-oriented textile company located in Kalurghat, Chattogram.

The BSEC approved the company's IPO in August 2015, raising Tk125 crore. According to DSE data, the company's total debt stood at around Tk12.4 billion in 2021.

Despite halted production, no dividends, and no new business announcements, the unusual price movement has intensified market surveillance.

Over the past month, Sonargaon Textiles also saw an abnormal rise in its share price. On 10 May, the price was Tk33.50, which increased to Tk87.50 by 15 June, a jump of 161.19%. There was no PSI behind this rise. Yesterday, the stock closed 1.78% higher at Tk80.

The state-owned Shyampur Sugar Mills also recorded a sharp increase in share price over a short period. On 19 May, the share price was Tk138.90, which rose to Tk238.90 by 9 June, an increase of about 72%. Later, it dropped 9.92% to Tk167.90.

Bangladesh National Insurance has shown a strong upward trend over the past three months. On 24 March, the share price was Tk53.80, which increased to Tk116.10 by 9 June, a rise of about 115.80%. Yesterday, it gained 2.02% to close at Tk106.

Al-Madina Pharmaceuticals also saw a significant price increase over three months. On 31 March, the share price was Tk38.10, which rose to Tk85.80 by 10 June, a gain of about 125.20%. It later corrected and fell 3.35% to Tk80.80 yesterday.

Nahi Aluminum Composite Panel also experienced an unusual rise over two months. On 5 May, the share price was Tk22.70, which increased to Tk41.10 by 7 June, a rise of 81.06%. The stock later corrected in recent sessions and closed down 1.39% at Tk35.40.