Kayes M Sohel

The capital market watchdog Wednesday came down hard on the worst performing companies in the stock market as it directed the bourses to suspend trading of 28 Z-category companies until further order.

The move came in the backdrop of abnormal and irrational price movement of shares of those companies during the last couple of months. Some of those companies share prices doubled in the last two months.

The SEC Wednesday sent a letter to the Dhaka Stock Exchange (DSE) asking it to halt trading of shares of 28 'Z' category companies from today (Thursday) until further order.

President of the DSE Md. Rakibur Rahman, who is now in Singapore, when contacted, appreciated the SEC move, saying that vested quarters are taking advantage of the ongoing up-trend of the market to push up the prices of junk stocks abnormally.

The listed issued covered under the latest SEC order include Al-Amin Chemical Industries Ltd, Ashraf Textile Mills Ltd, Bangladesh Chemical Industries Ltd, Bangladesh Dyeing and Finishing Mills Ltd, Bangladesh Zipper Industries Ltd, Beach Hatchery Ltd, Chittagong Vegetable Oil Industries Ltd, Excelsior Shoes Ltd, Gachihata Aquaculture Farms Ltd, GMG Industrial Corporation Ltd, Maq Enterprises Ltd, Maq Paper Industries Ltd, Metalex Corporation Ltd, Meghna Condensed Milk Industries Ltd, Meghna Pet Industries Ltd, Mita Textile Mills Ltd, Modern Cement Ltd, Padma Printers and Color Ltd, Quasem Textile Mills Ltd, Rahman Chemicals Ltd, Rangamati Food Products Ltd, Rose Heaven Ball Pen Industries Ltd, Sajib Knitwear and Garments Ltd, Sonali Paper and Board Mills Ltd, Sreepur Textile Mills Ltd, Tamijuddin Textile Mills Ltd, Wonderland Toys Ltd and Wata Chemicals Ltd.

However, the DSE itself has already suspended trading of the shares of 10 companies included in the SEC list.

The companies on the SEC list together had mopped up resources worth Tk 3297 million from the stock market through initial public offerings (IPOs).

The SEC has gone tough on the junk shares because it recently rose abnormally, making risky investment for the investors, said an official in the commission.

Vested quarters have been trying to catch fish in the troubled waters and, unfortunately, some innocent investors are playing into their hands, he said adding that there was no reason for the prices of the 'Z' category stocks going up.

Salahuddin Ahmed Khan, professor of the finance department of the Dhaka University, who was the immediate past chief executive officers of the DSE, term the move positive. "But the commission should have alerted the investors about it beforehand", he said.

"I don't know what prompted the regulator to make the sudden move," he said.

Expressing surprise at the SEC action, some small investors, however, wanted to know how would get back their money invested in 'Z' category stocks the trading of which had been suspended. "The SEC should come up with a plan to ensure the return of our investment", said an investor.

Around 80 listed companies are now under Z-category.