DSE asked to probe unusual share surge of inactive firms

Infographic: TBS

The Bangladesh Securities and Exchange Commission (BSEC) has directed the Dhaka Stock Exchange (DSE) to investigate the recent sharp rise in share prices and trading volumes of certain companies that have been inactive for a long time.

In the last week of February, the commission instructed the country's premier bourse to find out the reasons behind this unusual price surge and increased trading activity.

According to BSEC instructions, some companies that have not been operational for an extended period have recently seen a significant rise in share transactions. 

Since the DSE is responsible for ensuring compliance with trading rules and regulations, the regulator has asked the exchange to investigate whether any suspicious transactions or violations of securities laws have occurred.

The Dhaka bourse has been given 30 working days to submit its findings and observations to the commission.

An official, speaking on condition of anonymity, said the stock exchange identified 12 companies whose share prices have risen abnormally despite their commercial operations remaining closed for a long time.

According to the DSE website, Khulna Printing and Packaging Ltd (KPPL), a concern of the Lockpur Group, has witnessed an unusual 361% surge in its share price over the past 30 trading days, despite the company's operations being halted for more than three years.

On 23 December last year, its share price was Tk7.20, which unexpectedly rose to Tk33.20. On Monday, KPPL's share price stood at Tk24.90. This sudden rise has raised concerns among market observers, especially given the lack of updates regarding the company's operations or financial performance since December 2022.

Market insiders have described this rally as highly unusual, citing the absence of any significant announcements or developments that might justify such a price movement.

This is not the first time KPPL's share price has experienced unexplained volatility. Between October 2023 and February 2024, the company's stock skyrocketed by 480%, reaching a peak of Tk56.80.

Khulna Printing and Packaging Ltd's factory has remained closed for three years due to the freezing of Lockpur Group's bank accounts by government authorities, KPPL Chairman SM Amzad Hossain told The Business Standard recently. He added, "We are trying to unfreeze the bank accounts, but there has been no progress."

Similarly, shares of New Line Clothings, a struggling company that has not published its financial results since 28 April 2022, recently soared by 86% on the DSE.

According to the DSE, New Line Clothings' shares closed at Tk10.90 on Monday. On 13 January, its share price was Tk6.50, which later surged abnormally to Tk12.10.

Recently, a senior official of New Line Clothings, speaking anonymously to TBS, said, "The failure to meet loan installments has put the company in a precarious position. With a shortage of working capital, the company's factory has been inactive for years."

After the transfer of ownership of Yeakin Polymer, the new owner has not yet been able to start operations due to difficulties in securing a loan from lenders. Despite this situation, the company's share price recently increased by around 73%.

In December last year, its share price was Tk8.20, which rose abnormally to Tk14.20. On Monday, its share closed at Tk13.20 on the DSE.

Meanwhile, the share price of Ratanpur Steel Re-Rolling Mills (RSRM), a Chattogram-based listed company owned by Ratanpur Group, has increased by 53%. Two of RSRM's steel plants have remained closed for a long time due to debt and a lack of working capital.

Despite this situation, its share price surged from Tk8.90 to Tk13.60 on the DSE. On Sunday, its share closed at Tk13.10.

Additionally, the share prices of several other companies have risen unusually, despite ongoing political and economic uncertainty. These include Safko Spinnings (up 59%), Emerald Oil Industries (up 21%), and Appollo Ispat Complex (up 38%).