Junk stocks surge abnormally, blue-chips stuck at price floor
On the other hand, fundamentally sound stocks or blue-chip stocks are stagnant at their floor prices
Against the backdrop of a global economic crisis and bearish market, some non-operational and loss-making companies, commonly referred to as junk stocks, have recently been on the news because of the abnormal rise in their share prices.
On the other hand, fundamentally sound stocks or blue-chip stocks are stagnant at their floor prices.
Despite regulatory efforts, the bearish market saw no halt to the unusual surge in the share prices of these junk stocks. Even under regulatory inspection, the share prices of these firms continued to climb.
The junk stocks in question
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The shares of Khan Brothers PP Woven Bag Industries that were trading at Tk9.9 each in April this year, jumped by a staggering 883% to Tk107.2 in just eight months without any explanation.
The company manufactures different types of polypropylene (PP) plastic woven bags for local and international markets.
Although the company's factory is now closed, the Dhaka Stock Exchange (DSE) carried out an inspection in its closed factory because of the share price increase.
Last year, Khan Brothers failed to recommend any dividend to its shareholders.
Khulna Printing & Packaging Limited, a concern of the Lockpur Group, saw a whopping 244% share price jump in one month after the group's owner, who had fled the country two years ago, showed up this October.
The company's Chairman SM Amzad Hossain, who is also the former chairman of South Bangla Agriculture and Commerce (SBAC) Bank, escaped the country in 2021 even after the Anti-Corruption Commission (ACC) imposed a travel ban because he misappropriated funds.
He returned in October this year and since then, Khulna Printing's share price has been skyrocketing despite the company being non-operational for the last three years.
The DSE carried out an inspection in Khulna Printing as well in order to find the reasons behind its share price increase.
The share price of publicly listed Olympic Accessories Limited, which has been in losses for three years now, jumped 78% in just 14 trading sessions.
This was not the first time the loss-making company's share price soared abnormally though. In June this year, the company's shares shot up 75% to Tk17.4 each. Before this unusual price increase, its shares were stuck at the floor price for more than six months.
Managing Director Golam Kibria recently told TBS, "There is no undisclosed PSI to explain this."
The share price of Standard Ceramic Industries Ltd, a company that has been in losses for the last two fiscal years, has risen 76% within ten trading sessions.
The tableware manufacturer incurred back-to-back losses in the 2021-22 and 2022-23 fiscal years because of a significant drop in demand for its products as well as because of higher prices of gas and raw materials.
Share prices of Shyampur Sugar Mills and Zeal Bangla Sugar Mills rose 156% and 45% respectively without any undisclosed price-sensitive information amid the regulatory scan.
