The share price of Bangladesh Industrial Finance Company (BIFC), a junk stock, is rising 'abnormally' as the company topped the gainers' list for the second straight session on Wednesday.
The scam-hit non-bank financial institution's stock jumped 39 per cent in the past five trading days although the company is incurring huge losses and not giving dividends for the past eight years.
The share price of the loss-making NBFI, listed with the Dhaka Stock Exchange in 2006, soared 8.86 per cent further on Wednesday to close at Tk 8.60 each. Its share price was Tk 6.20 five days ago.
All financial indicators of the company such as earning per share, net operating cash flow per share and net asset value per share are negative as per its latest published financial statement for the year ended in 2019.
The company has reported an accumulated loss of Tk 11.05 billion as on 31 December 2019 and 95 per cent of investment of the company is classified, as of 31 December 2019.
The company disbursed 5.0 per cent stock dividend in 2013.
In spite of poor financial condition, its unusual price hike prompted the DSE to serve notice on the company several times during the last few months.
The company, however, said in knee-jerk responses: There is no undisclosed price sensitive information for recent unusual price hike of the company.
A company's stocks are termed as junk when its commercial production is shut for six months in a row, it fails to arrange annual general meetings on time or fails to provide dividends to shareholders.
Share prices of some junk stocks such as Meghna Condensed Milk, Meghna Pet Industries and C&A Textile are also rising 'abnormally' in the recent weeks.
Some companies with low performance records also made their way into the top gainers' list of the DSE frequently, riding on a rumour that the investors are putting money in the securities.
"The influential investors by disseminating rumours are trying to manipulate the prices of shares of many companies to make quick profit," said an analyst at a leading brokerage firm.
He said the investors are chasing these stocks without conducting any proper analysis, as they see continuous rise in values.
"If these stocks face corrections, general investors will be the ultimate losers, which will dent their confidence," he said.
He noted that investors should be careful about the unusual price hike of the low-profile companies and they should not pay any heed to rumors at the time of trading shares.
Senior executives of the company could not be reached over the telephone.
An official of the Bangladesh Securities and Exchange Commission (BSEC) said they are looking into the matter and the investors should also be careful about the unusual price hike of the low-profile companies.
