Non-operational companies dominated the top gainers' chart on the Dhaka bourse in August, raising fresh concerns over speculative trading and possible price manipulation at a time when the broader market emerged as the worst performer among its regional peers.
The monthly gainers' list was led by Tung Hai Knitting & Dyeing, whose share price jumped 53.6 per cent, followed by GBB Power, which gained 50 per cent.
Both companies are identified by the Dhaka Stock Exchange (DSE) as among the closed/non-operational companies.
Tung Hai Knitting has been non-operational since January 2019, while GBB Power has remained closed since June 2023.
GBB Power has remained idle since the expiry of its power purchase agreement with the Bangladesh Power Development Board. The company also told the DSE that it had no undisclosed price-sensitive information to explain the unusual rise in its share price and trading volume.
The stock of Tung Hai Knitting experienced substantial volatility during August. It rose by more than 10 per cent in several trading sessions, prompting the DSE to raise queries over unusual movements in its price and trading volume.
The other non-operational companies on the DSE's top 10 gainers' chart were Alltex Industries, Baraka Power and Nurani Dyeing, with their share prices soaring 20 per cent, 19 per cent and 14 per cent respectively during the month, according to market data.
The sharp rallies in companies whose factories are closed, whose machinery remains idle and whose workers have long left have raised questions about the quality of price discovery on the country's premier bourse.
The DSE has previously flagged unusual movements in several dormant or financially weak companies. In some cases, shares of companies whose operations had remained suspended for years more than tripled within a few months amid heightened trading interest.
The latest development emerged at a time when the broader market was struggling. The Bangladesh stock market was the worst performer among its regional peers in August, with the benchmark DSEX plunging 298 points, or 5.05 per cent, amid persistent domestic headwinds and a lack of fresh positive catalysts.
On the other hand, Vietnam was the best performer, gaining more than 5 per cent in August, followed by Indonesia with a 4.64 per cent return, Sri Lanka with a 1 per cent rise, and Pakistan with a 0.50 per cent return, according to Sheltech Brokerage.
Market operators say persistent gas and electricity shortages in Bangladesh continued to weigh on investor confidence, as factory shutdowns, production disruptions and greater reliance on costly alternative energy sources raised concerns about industrial output and corporate profitability.
Against this backdrop, the contrasting performance of closed companies and the broader market points to growing speculative activity in selected counters.
Speculative trading and short-term profit motives fuelled the price surge of non-functional companies, said Prof Abu Ahmed, chairman of the Investment Corporation of Bangladesh (ICB).
Manipulators often drive up prices through serial trading and spread rumours to lure general investors, who may be attracted by extraordinary short-term gains without assessing the underlying financial condition or operational status of the companies, he said.
"Stronger surveillance, quicker detection of suspicious trading and prompt enforcement are essential to preventing unusual rallies in weak and closed companies," Mr Ahmed added.
Masud Khan, chairman of the Bangladesh Securities and Exchange Commission (BSEC), said at a recent meeting that the regulator would examine whether large orders or serial transactions were being used to manipulate stock prices.
"Placing a large order by itself is not illegal, but a series of transactions aimed at influencing prices could constitute an offence," he said.
The regulator is moving towards AI-based surveillance, which is expected to strengthen its ability to detect unusual trading patterns and distinguish genuine investment from potentially manipulative activity. The DSE is also expected to upgrade its existing surveillance system, to be followed by the BSEC's move towards AI-based surveillance.
Market participants, however, say technology alone will not be enough. The upgraded systems will have to be backed by experienced manpower, rapid investigation and timely enforcement to make surveillance effective.
Currently, 126 companies are in the 'Z' category, while 36 companies are classified as closed/non-operational, out of a total of 360 listed companies on the DSE.
