Junk stocks soar on expectation of manipulation
Junk stocks yesterday soared once again upon speculation, much to the bafflement and frustration of analysts.
Five poorly performing companies from the Z category -- Information Services Network, Emerald Oil, Progressive Life Insurance, United Airways and Meghna Condensed Milk -- and a B category company occupied six of top 10 gainers’ list. Agrani Insurance, a B category company, was also in the list.
When a company fails to provide dividend or hold annual general meetings or its factory remains closed it is put in the Z category.
“A rumour was spread in the market that junk stocks would be manipulated by some big players, so some retail investors bought the stocks,” said a top official of a leading merchant bank requesting anonymity.
General investors are not rushing towards stocks of well-performing companies, whose prices are not rising as much.
“They are falling for manipulation,” he said, while calling for crackdown on such practice.
Otherwise, investors will go after junk stocks, he added.
A stock broker echoed the same.
General investors are frustrated that well-performing stocks have been sliding in the last few months.
In the last two weeks, DSEX, the benchmark index of the DSE, fell 3.13 percent, whereas DS-30, the blue-chip index, lost 4.33 percent.
“People rushed for other stocks as blue-chip stocks fell severely,” the stock broker added.
Meanwhile, the index shed 39.2 points last week.
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The indices were bearish last week as investors were offloading stocks of ceramics, telecom and textile sectors, Royal Capital, one of the stock brokers, said in its analysis.
Since the banking sector is going through liquidity pressure, it has made the financial markets unstable, it said, adding that investors were also put off by the tax measure in this fiscal year’s budget.
Investors have also become shaky after the liquidation of People’s Leasing.
Yesterday, DSEX shed 11.09 points, or 0.23 percent, to close at 4,782.09.
Turnover, another important indicator of the market, dropped 0.16 percent to Tk 312.63 crore.
Of the traded issues, 129 advanced, 180 declined and 43 remained same.
National Tubes dominated the turnover chart with transaction of Tk 14.43 crore shares, followed by Standard Ceramics, Monno Jute Stafflers, Paramount Insurance and Summit Power.
Malek Spinning was the day’s best performer with a 13.04 percent gain, while Al-haj Textiles was the worst loser, shedding 8.55 percent.
Chattogram stocks gained 23.56 points, or 0.26 percent, to finish the day at 8,840.47.
The port city bourse traded shares and mutual fund worth Tk 51.60 crore. Losers beat gainers as 115 declined and 104 advanced, while 29 finished unchanged.
