Although the price of shares in the capital market is rapidly increasing, retail investors are at risk, experts said.
The capital market has witnessed a rapid growth and broke records one after another.
Besides, indices and transactions are growing every week.
Dhaka stocks extended their rally for the twelve straight week to cross 7,000-mark on Thursday for the first time as the buoyant investors continued their buying spree riding on regulatory measures.
Market analysts said the share prices of most companies have gone up over the past few months due to the rise in the stock market index.
They said the share prices of several weak companies in the market are currently rising abnormally.
Gambling is being done with several shares, they said, adding that if this gambling is not stopped, investors may face huge losses again.
In this regard, Professor Abu Ahmed, a capital market analyst and professor of economics at Dhaka University, told Bangladesh Post, “The share prices of some weak companies have risen abnormally. Some gamblers have manipulated to increase the price of these shares. Ordinary investors will suffer if they run after gamblers.”
He said the country's capital market is better than ever.
This opportunity has been exploited by the manipulation cycle, he said, adding that they are stopping production and investing in shares of low capital companies rather than good companies.
Through serial trading, the shares of these companies are increasing in price, then they are selling the shares and making money, he mentioned.
In addition, ordinary investors are investing in the shares of these companies in the hope of making huge profits, Abu said.
Around 70-80 percent of investors are losing out by investing in these risky companies, he said, adding that only 20-30 percent of investors are benefiting.
As a result, the regulatory body should take legal action against the manipulation cycle to protect the market and investors.
“The government should immediately prepare the ground quite well to bring in some good companies, in order to undertake a drive to develop a long-term financing capital market,” Ahmed mentioned.
He suggested investing in companies which are continuing to make good profits over the last few years with business-successful organizations, and efficient management authorities, when considering investing in the capital market.
“As a result, investors have to invest by watching. Otherwise we have to face the risk,” Ahmed added.
However, as the prices of shares of some companies have risen sharply recently, the Dhaka Stock Exchange (DSE), the country's main stock exchange, has issued a warning to the investors of those companies.
Prices of shares of Shepherd Industries, Eastern Lubricants, Dulamia Cotton and Dominic Steel Buildings, which are listed on the stock exchange, have risen abnormally. DSE issued a warning for the investors of these four companies on Wednesday.
The DSE said a notice was sent to the companies on Wednesday to explain the reason for the unusual rise in share price.
In response, authorities at the four companies said there was no undisclosed price-sensitive information for the unusual rise in share prices recently.
The DSE also warned investors after the rise in prices of two months, Rahima Food's share price had risen abnormally for no reason.
A review of the data shows that on June 27, the company's share price was Tk 210 per share, which increased a lot and stood at Tk 375.40 at the end of the transaction on 31 August.
In other words, the company's share price has risen by Tk 156 in around two months.
The DSE website does not provide information on when the company last paid dividends to investors.
However, the company has released its financial report for the first nine months of the fiscal year 2020-21 (July 2020 to March 2021).
According to the report, the company has earned only 6 paise per share during the time.
On the other hand, shares of Paper Processing and Packaging Limited started trading in the capital market on June 13 this year from the Over the Counter (OTC) market.
On the day of the transaction, the share price of the company was Tk 17.60. On Thursday, the share price of Paper Processing and Packaging increased by around 1252 percent or Tk 164.1 to stand at Tk 238.
Mohammad RezaulKarim, executive director and spokesperson of the Bangladesh Securities and Exchange Commission (BSEC), said, “Some evil people want to do mischief in the market. They want to obscure the stable capital market. We are working against this cycle.”
He said, “I have formed a committee on behalf of BSEC. The committee is looking into whether the share prices of some companies have risen at an unusual rate and whether the company has withheld any price sensitive information. It is also being checked whether the financial report has been manipulated or whether the company's earnings per share (EPS) has been inflated.”
RezaulKarim said, “It is not in production. The head office of the company is also closed. Even then, the share price is rising. There must be something behind it. We are watching these closely.”
However, the market capitalization of the prime bourse also hit a fresh all-time high at Tk 5,863 billion on Thursday, surpassing the previous high of Tk 5824 billion recorded a day before.