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The Matiur Magic in Capital Market

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When most investment professionals at Motijheel were struggling to stay afloat in the stock after the 2010 crash, Matiur Rahman, a senior revenue official suspended recently, outsmarted them all.

Matiur and his family received pre-IPO (initial public offering) placement shares from at least 20 firms that should have cost him around Tk50 crore, if he had paid the face value, or even less if he got them free of cost like that from the controversial Ring Shine Textile.

The period is known to regular market investors as the dark decade for Bangladesh’s IPO market that saw too many undeserving stock exchange listings.

But it was high time for Matiur to make his fortune without risks; he maximized his gains manifold mainly from the secondary market.

He himself acknowledged in a media interview last week how his pre-IPO placement shares in Fortune Shoes generated him over six times return in a few years.

According to analysts, even if he had sold the pre-IPO shares at a 3-4 times profit in 2-3 years, the family already had a stock market fortune of at least Tk150 crore by the pre-IPO placement.

What was his magic?

It was his power as a top revenue official and the nexus he created.

Market people said virtually taking no risk and enjoying a free ride abusing his power at the revenue office was his stock market magic lamp.

He abused his different powerful posts at the National Board of Revenue offices over years to build a nexus, get shares of so many non-compliant private companies at a little or no cost, help them go public and exit at a peak price before the firms started to show their actual weak faces followed by depression in their stock prices.

However, he boasted his own stock trading “skills.”

To justify his wealth, Matiur himself announced his stock market acts that are nothing but insider trading, said market experts.

“I buy stocks in the companies’ tough times, advise them for a turnaround and sell at high prices during good days,” he told the media last Wednesday.

Does he have a regulatory licence to advise companies eying stock market listing? Can he do it holding a public office position? Questions remain.

In fact, according to investment bankers who talked to the news reporter, IPOs influenced by Matiur and his allies were a certain shot as their listing process was being expedited in every step.

Stock market expert Abu Ahmad, a former professor of economics at the University of Dhaka, said stock market and honest investors have been suffering due to the nexus of corrupt powerful people.

“You will barely find Matiur-gang backed IPO’s of quality, see their performance post the exit of the placement shareholders,” he added.

“They used the placement shares as a tool of pump and dump schemes. The market and investors are bearing the consequence,” he added.

Acme Pesticides, Associated Oxygen, CNA Textile, Dominage Steel, Fortune Shoes, Kattali Textile, Lub-rref Bangladesh, Ring Shine Textile and ML Dyeing were among the IPOs that were backed by Matiur, as revealed by their prospectuses.

Each of the companies are struggling in business since the pump and dump schemes expired post listing.

Ring Shine was a revealed case of “unpaid paid-up capital”, said stockbrokers. Issuing crores of free shares for people like Matiur, the company ruined the honest investors who paid for its shares at any stage.

Trading at Tk15 to over Tk20 post listing, Ring shine shares having a face value of Tk10 now are trading at Tk3.6 a piece at the Dhaka Stock Exchange.

Two top tier investment bankers of the country told the news reporter seeking anonymity, most of the companies listed in the past one and half decade were non-compliant ones, they showed a rosy picture to the investors and lenders and the opposite to the tax authorities.

For instance, Islam Oxygen having its roadshow for IPO failed because of the fact later revealed that it hid revenue and profits to the tax authority.

Matiur helped many firms in many such cases by accepting fake tax files and letting firms go public.

“Unlike most others, Matiur was very intelligent,” said a brokerage veteran, adding that he himself and his family members barely entered the secondary market manipulation game as he loved to avert risks and enjoy the free ride.

Insider trading

The Bangladesh Securities and Exchange Commission Executive Director and Spokesperson Rezaul Karim told the news reporter securities regulations don’t prohibit government officials’ investment in stocks.

However, if it is evident that anyone from his or her privileged position uses exclusive information to gain from trading securities, that is insider trading and a punishable offence.

The regulator was yet to discover insider trading by Matiur as far he knew, said the BSEC official.

However, Rezaul Karim added, the commission is always open to act upon requests from other agencies of the government and it also launches investigations upon written complaints by anyone, of course having a prima facie ground.

A top BSEC official told the news reporter yesterday afternoon that the BSEC was going to order the Central Depository Bangladesh Limited to freeze the beneficiary accounts of Matiur and his family members.

Md Jahurul Haque, a commissioner of the Anti-Corruption Commission (ACC), said according to the Public Servants Act, there is no legal restriction on government employees buying savings certificates or investing in the stock market. However, any investments and earnings from the stock market must be disclosed in the official’s or employee’s tax return, he added.

He further mentioned that if allegations of stock price manipulation arise, the ACC will investigate the timing, type of company shares bought and sold, and whether there was any manipulation. If any irregularities are found, actions will be taken against the responsible individual.

The ACC Commissioner affirmed that the ACC has already started the investigation and that all facts will eventually be uncovered.

ACC acting upon complaints against Matiur

Previously, Matiur Rahman was granted ‘clean certificates’ by the ACC four times

But this time ACC looks serious.

ACC Commissioner Jahurul told the news reporter yesterday that a decision was made on June 4 to investigate Matiur Rahman’s assets based on complaints which were found to be worth investigating after preliminary assessment.

He stated that the ACC is investigating the allegations regarding Matiur’s assets as well as examining reports published in the media.

An official said a complaint against Matiur of amassing wealth beyond known income was filed with the ACC in May. The complaint was backed by substantial documentary evidence.

“We have already requested relevant agencies to verify the amount of land, plots, flats, and company shares transferred in the names of Matiur, his two wives, their children, and other close relatives,” he said, claiming that significant information has already been obtained.

Not just in Dhaka, Narsingdi, and Feni, Matiur and his family members own property in Chattogram, Noakhali, Gazipur, Tangail too.

“Additionally, preliminary information has been obtained regarding substantial wealth laundered to Canada, the UK, and Dubai. Ownership of a shopping mall in Singapore has also been found in the name of one of Matiur’s children,” the official said.

The investigation team official said that to obtain information about foreign assets, a letter will be sent to the Bangladesh Financial Intelligence Unit (BFIU) this week.

According to ACC sources, based on separate allegations against this official over the span of the last 18 years, the ACC conducted investigations in 2004, 2008, 2013, and 2021. However, the ACC concluded these investigations by officially closing the cases, indicating that no evidence of wrongdoing was found. Consequently, any further investigation and subsequent actions concerning Matiur Rahman by the commission were halted.

Asked how Matiur got the clean chit, ACC Commissioner Zahurul said, “At that time, the investigating officers perhaps did not find any truth in the allegations.”

ACC lawyer Khurshid Alam Khan told the news reporter that since a new investigation has now started, the ACC will also review the previous allegations as part of the current investigation.

Meanwhile, a source from the ACC has confirmed to the news reporter that Matiur has already left the country.

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Bearish Trend on DSE

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Dhaka Stock Market DSE, Bourse on the last working day of the week, 18th July, ended with a drop in Indices and Turnover from the previous working session. This information is known from DSE sources.

391 crore 52 lakh taka shares were traded on this day. 192 crore 89 lakh less tradings were done in DSE today compared to the previous workday, July 16th, Shares worth Tk 662 crores 24 lakh shares were traded last time, Tuesday.

The benchmark DSEX decreased 36.64 points or 5,446 The Shariah-based index DSES dropped 10.43 points or 1,191 and the blue-chip index DS30 lost by 8.10 points or 1,953.

Of the issues traded, 38 advanced, 311 declined and 46 remained unchanged.

Techno Drugs Limited ranked top gainer on DSE, the share price increased by Tk 3.10 paisa or 9.72 percent. On this day, the share was last traded at Tk 35.00 paisa.

BD Thai Aluminium Limited ranked top loser on the DSE, the share price dropped by Tk 0.60 paisa or 3.00 percent. On this day, the share was last traded at Tk 19.40 paisa.

DSE topped on trade is Sea Pearl Beach Resort & Spa Limited 15 crore 86 lakh takas of company shares have been traded.

A total of 31 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 1 crore 6 lakh 61 thousand 203 shares of the companies were traded. The financial value of which is 31 crore 82 lakh taka

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Asian markets drop with Wall St as Biden sparks fresh chip fears

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Asian markets sank with Wall Street on Thursday after a warning from the White House that it would target firms supplying China with key semiconductor technology, and Donald Trump’s comments on crucial chip supplier Taiwan.

The dollar remained subdued following its latest retreat caused by growing expectations that the Federal Reserve will cut interest rates at least once this year.

Firms linked to artificial intelligence have led a surge in equities this year as investors see the sector as the next major growth area, with market darling Nvidia piling on more than 140 percent since the start of the year.

The industry has helped push the S&P 500 and Nasdaq to multiple records in the past seven months, helped by the prospect of lower borrowing costs.

But the rally took a blow Wednesday when Bloomberg News reported that Joe Biden was looking at imposing strict curbs on firms such as Tokyo Electron and ASML if they continue allowing Beijing access to their chip tech.

The report, which comes as he looks to buttress his credentials as strong on China ahead of November’s presidential election against Trump, sent shivers across trading floors, sending the Philadelphia Semiconductor Index plunging nearly seven percent — its heaviest loss since 2020.

Nvidia dived more than six percent and Dutch firm ASML collapsed more than 12 percent.

Tokyo Electron fell 7.5 percent on Wednesday and a further 9.5 percent Thursday. TSMC shed more than three percent in Taipei.

Meanwhile, Trump’s comments that Taiwan — home of the key chip-maker TSMC and other major producers — should pay the US for its defence caused some geopolitical unease.

The fear fuelled a sell-off across Asian equities, with Tokyo and Taipei down at least two percent, while there were also hefty losses in Hong Kong, Shanghai, Sydney, Seoul, Singapore and Manila.

Analysts warned that the imposition of more chip restrictions could fuel further selling and lead to a correction in markets, which some warn have become overbought.

– ‘A big currency problem’ –

Worries over tech have offset the feel-good mood that has been sparked by recent data and comments from Fed officials indicating they are ready to cut interest rates as soon as September, and possibly again before January.

The latest boost for doves came in the central bank’s Beige Book summary of the economy, which said there were signs it was slowing.

“Expectations for the future of the economy were for slower growth over the next six months due to uncertainty around the upcoming election, domestic policy, geopolitical conflict, and inflation,” the report said.

The prospect of lower rates has weighed on the dollar, while the yen — which has been battered against the greenback this year — has won support from bets on a Bank of Japan hike in coming months.

“Markets are pricing in the Fed to start cutting rates in September, and risks of yen carry trade — the practice of borrowing low yielding currencies to invest in high yielding currencies — unwinding are building as yield gap narrows,” Saxo researchers said in a note.

“Recent comments from Trump have also hinted at concerns from US dollar strength.”

Trump, in Milwaukee for the Republican National Convention, has also weighed in on the dollar’s relative strength against the yen and yuan, telling Bloomberg Businessweek “we have a big currency problem” and “I would always notice they fought very hard to keep their currency low”.

Taylor Nugent, at National Australia Bank, said: “The comments play to the view (that) bilateral trade deficits and currency valuations are a key focus, and tariffs would be a key negotiating tool.”

Investors are keeping tabs on Beijing, where China’s leaders are expected to wrap up a key gathering, with hopes President Xi Jinping will unveil fresh measures to boost the world’s number two economy.

– Key figures around 0300 GMT –

Tokyo – Nikkei 225: DOWN 2.0 percent at 40,277.86 (break)

Hong Kong – Hang Seng Index: DOWN 0.5 percent at 17,652.42

Shanghai – Composite: DOWN 0.6 percent at 2,944.67

Pound/dollar: DOWN at $1.3007 from $1.3012 on Wednesday

Euro/dollar: DOWN at $1.0938 from $1.0941

Dollar/yen: DOWN at 155.92 yen from 156.33 yen

Euro/pound: UP at 84.09 pence at 84.07 pence

West Texas Intermediate: UP 0.7 percent at $83.39 per barrel

Brent North Sea Crude: UP 0.5 percent at $85.49 per barrel

New York – Dow: UP 0.6 percent at 41,198.08 (close)

London – FTSE 100: UP 0.3 percent at 8,187.46 (close)

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LafargeHolcim reveals their Q2 Financials

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One of the listed companies, LafargeHolcim Bangladesh Limited discloses its financial reports for the second quarter, (April – June 24).

The company’s Consolidated earnings per share (EPS) Tk 1.14 paisa in Q2 of the current financial year (April – June 24). Consolidated EPS was Tk. 0.69 for January-June 2024 as against Tk. 1.47 for the same period last year. EPS  was Tk 0.80 paisa during the same period last year. Consolidated NAV per share was Tk. 16.60 as of June 30, 2024.

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