Share Market Trading of Halted Production Firms Sparks Concern

Concerns Over Non-Performing Companies in the Share Market

Share market analysts have expressed growing concerns about potential manipulation, particularly regarding four listed companies that have halted or suspended their production. These firms are not generating any revenue, and experts warn that investing in such companies is highly risky. Analysts emphasize that small investors should exercise caution to avoid falling into traps set by unscrupulous traders.

Tariqul Islam, a long-time investor in the Dhaka share market, highlighted the dangers of investing in these high-risk companies. He mentioned that some traders may have access to insider information, allowing them to buy and sell shares at strategic times for maximum profit. However, small investors, driven by the desire for quick gains, often end up losing their investments.

For example, Aramit Cement Limited, which has struggled since the onset of the Covid-19 pandemic, currently has its shares trading at Tk 11.70 each. A recent inspection by the Dhaka Stock Exchange (DSE) revealed that the cement factory has been non-operational since before last July. Despite repeated warnings from the DSE, the company's shares continue to be traded, with significant activity recorded on August 24 and September 3.

Khosru, an industry expert, emphasized the need for government initiatives to restore trust among share market investors. He pointed out that the continued trading of shares in companies like New Line Clothings Limited raises serious concerns. Although the company’s shares are currently trading at around Tk 5, the price had soared to Tk 26 a year ago.

A recent investigation by the Bangladesh Securities and Exchange Commission (BSEC) uncovered a massive manipulation involving New Line shares in 2021. In September this year, the BSEC fined five investors Tk 13.33 crore for their involvement in the scheme. Despite this, the company's shares continue to trade actively in the Z-category, indicating its inability to pay dividends to shareholders. Currently, 30% of the shares are held by the company's sponsors and directors, while the remaining 70% are owned by institutional and individual investors.

Asaduzzaman Asad, branch manager of a Motijheel-based brokerage house, described such stocks as "a thorn in the investors' side." He called for the introduction of a mandatory buyback law, compelling non-performing companies to repurchase their shares. Otherwise, he warned, investors will keep falling into similar traps.

Another non-operational company, Nurani Dyeing & Sweater Limited, has seen its share price fluctuate between Tk 2.40 and Tk 5 over the past year. Despite the suspension of operations since July, trading in its shares continues.

Banks' additional investment term in the share market has been extended for a year, raising questions about the stability of the market. When asked why investors remain interested in such companies, some traders admitted that those with prior losses are desperate to recover financially. Low-price shares, they said, tempt particularly small investors who believe it is worth taking the risk to gain more with less investment.

Ratanpur Steel Re-Rolling Mills Limited (RSRML) has also stopped production since the beginning of the year. Nevertheless, the company's shares are still being traded, though their price dropped from Tk 15 to Tk 8 in a year.

Market analysts warn that the continued presence of such non-performing firms poses a serious risk to market stability. Minhaj Mannan, director of the DSE, noted that in the past 15 years, many weak companies were granted IPO approvals. Some of these companies ceased production or even disappeared, discouraging quality firms from entering the market and giving manipulators a free rein.

Despite these concerns, Abu Ahmed, chairman of the Investment Corporation of Bangladesh (ICB), remains hopeful. He believes that several fundamentally strong companies are expected to be listed next year. "Once good companies come to the market, investors' confidence will naturally improve. The market will be vibrant," he added.