Stocks
Jute Spinners in Manipulation, Recovery from Loses to take 50yrs
Jute Spinners Limited, a company listed on the stock market, is causing a buzz with its shares. Despite being listed on the stock market almost four decades ago, the company did not offer any returns to ordinary investors for a long time. However, the company’s share price has recently witnessed an unprecedented surge. Surprisingly, the management of the company denies any specific reason for the increase in the share price. A.T.M. Mostafa, the company’s secretary, claims that it will take at least 50 years to overcome the losses of Jute Spinners.
Market insiders claim that there is undoubtedly a speculative frenzy behind the abnormal surge in the shares of this downturn company. The appropriate authorities at the Bangladesh Securities & Exchange Commission BSEC should investigate the matter and bring those involved to justice. Over the past few days, a vicious cycle fueled by weak and speculative companies has created an artificial crisis, leading to an increase in share prices. This poses a higher risk of long-term losses for ordinary investors. Recently, the DSE has cautioned investors about this issue. Even the company itself has informed investors that there is no reason for the increase in share prices other than speculation.
It has been reported that on April 18th, the share price of downturn Jute Spinners Limited was Tk 214.40. On May 25th, the latest transaction took place at Tk 445.90. Within just 22 trading days, the company’s share price has increased to Tk 231.50, indicating a growth rate of 107.97% in percentage terms.
Jute Spinners Ltd., a prominent company listed on the Dhaka Stock Exchange, is being scrutinized for an unusual surge in its share prices. According to the latest information obtained on May 15th, the Dhaka Stock Exchange (DSE) is eager to uncover the reasons behind the abnormal increase in Jute Spinners’ share prices. However, the company has informed the DSE that there is no undisclosed sensitive information behind the growth of its share prices. In other words, the company’s shares have risen without any specific cause.
It has been revealed that Jute Spinners did not offer any dividends to its investors despite being listed on the stock market for the past four decades. The company has struggled to generate profits over the last ten years, with its last recorded income occurring in 2012. Even though the company earned a modest amount of Tk 2.06 per share that year, it failed to distribute any dividends to ordinary investors. Since 2012, Jute Spinners has been unable to generate any substantial earnings. Instead, the company ia making losses every year, The company is losing Tk 8 crore every year. The production of the company has been stopped for a long time. As a result, shareholders of the company have been left uncertain for an extended period.
According to the source from Dhaka Stock Exchange, Jute Spinners’ shares were valued at Tk 48.14 per share in 2013. However, over the next two years, the value of the shares declined. In 2014, the shares were priced at Tk 43.64, and in 2015, they dropped further to Tk 19.69 per share. That year the company had a loss of 42 taka 10 paisa per share. In 2021, the loss (per share) increased to Tk44.59 paisa. The company suffered more losses in 2022. In the last year, the loss per share of the company was 44 taka 82 paisa.
Meanwhile, the debt amount of downturn Jute Spinners is 23 times higher than the paid-up capital. It is known that when the company was listed on the stock market in 1984, the paid-up capital was Tk 1 crore 70 lakh, while the company’s outstanding loans amounted to Tk 40 crore 68 lakh. Among the loans, Tk 31 crore 77 lakh were short-term loans, while the remaining Tk 8 crore 91 lakh were long-term loans.
The company’s assets are also negatively affected by the loans, as indicated by the net asset value per share in the 2022 financial report, which stands at a negative Tk 438.42 per share.
According to the auditors’ report of Jute Spinners, submitted in 2016, the company’s operations are considered risky due to ongoing losses. Continuous losses and the accumulation of losses have impacted the company’s financial stability, as stated by the auditing firm.
A.T.M. Mostafa, the Secretary of Jute Spinners, stated to Orthosongbad that there is no undisclosed information behind the increase in the company’s share value. It will take 50 years to recoup the company’s existing losses, despite the fact that the company’s net worth is currently losing by Tk 8 crore annually. However, even if there is a profit, it will not amount to Tk 8 crore per year. Out of the Tk 8 crore losing in net worth each year, Tk 6 crore goes towards bank interest. Even if the company shuts down, it will still have to pay this Tk 6 crore to the bank.
Regarding this matter, Mohammad Rezaul Karim, the Executive Director and Spokesperson of the Bangladesh Securities and Exchange Commission (BSEC), advised investors to exercise caution when investing. Companies with weak fundamentals have a lower chance of providing returns. Currently, shares of weak companies are experiencing volatility. The commission is closely monitoring these issues and has instructed the Dhaka Stock Exchange (DSE) to investigate several companies.
He further emphasized that investors need to be aware when making investments. The commission takes time to investigate any irregularities and impose penalties, during which many investors suffer losses.
Global financial markets took a sharp nosedive on Tuesday as investors grew increasingly anxious about the possibility of another interest rate hike in the United States. Concerns were compounded by worries that these elevated rates might persist to combat stubbornly high inflation.
Despite a brief rebound on Wall Street, early Asian trading saw the dollar strengthen even further, driven by a surge in US Treasury yields to their highest levels in 16 years. This development reignited fears that the world’s largest economy could slip into a recession.
Adding to the uncertainty, lawmakers in Washington struggled to reach an agreement on spending, raising the specter of a government shutdown. This political deadlock prompted warnings that it could negatively impact the US credit rating. The recent surge in oil prices further fueled concerns that central banks’ efforts to curb inflation might be derailed after over a year of tightening measures.
Last week, the US Federal Reserve indicated that it could raise borrowing costs once again before the year’s end. This announcement dealt a blow to many market participants who had hoped that the interest rate hike in July would be the last for a while. Additionally, policymakers hinted that rates might need to remain at their highest levels in over two decades for an extended period.
Market analysts from the BlackRock Investment Institute believe that “rates will stay high” and that Treasury yields could continue to climb. They suggest that rising long-term bond yields reflect the market’s adjustment to increased macro and market volatility. The prevailing sentiment, as noted by National Australia Bank’s Tapas Strickland, is that rates will remain elevated for an extended period, reflecting the Federal Reserve’s stance.
In early Asian trading, major stock markets including Tokyo, Hong Kong, Shanghai, Seoul, Singapore, Sydney, Taipei, and Wellington all experienced declines, reflecting the uncertainty gripping investors. The situation in China’s property sector also raised concerns, with the troubled developer Evergrande announcing that it had missed an onshore bond repayment.
On the currency front, the dollar remained near 11-month highs against the yen, prompting Japanese authorities to express their willingness to intervene if the dollar’s ascent becomes excessive. However, analysts do not anticipate a significant strengthening of the yen, given the Bank of Japan’s commitment to its ultra-loose monetary policy.
The ongoing political standoff in Washington, where hardline Republicans in the House of Representatives have blocked key spending bills, is causing unease among investors. If an agreement is not reached by the weekend, it could lead to a government shutdown, a scenario that Moody’s warns would have negative implications for the US’s top-tier credit rating.
Dhaka Stock Exchange DSE, Bourse on the second working day of the week, September 25, ended with price Index mixed & turnover drops. This information is known from DSE sources.
500 crores 74 lakh shares were traded on this day. 59 crore 46 lakh less trading was done in DSE today compared to the previous workday, 24 September, Shares worth Tk 500 crores 74 lakh shares were traded last time, Sunday.
The benchmark DSEX added 1.84 points or 6,282 The Shariah-based index DSES gained 0.64 points or 1,359, and the blue-chip index DS30 decreased by 1.54 points or 2,135.
Of the issues traded, 82 advanced, 62 declined and 156 remained unchanged.
Khan Brothers PP Woven Bag Industries Limited ranked top gainer on DSE, the share price increased by Tk 2.20 paisa or 8.98 percent. On this day, the share was last traded at Tk 26.70 paisa
Legacy Footwear Ltd ranked top loser on the DSE, the share price dropped by Tk 3.50 paisa or 4.31 percent. On this day, the share was last traded at Tk 77.70 paisa.
DSE topped on trade is Union Insurance Company Ltd 28 crore 66 lakh takas of shares of the company have been traded.
A total of 70 companies’ shares were traded in the Block on Dhaka Stock Exchange, 80 lakh 63 thousand 218 shares of the companies were traded. The financial value of which is 49 crore 96 lakh taka.
Dr. Rumana Islam, Commissioner of the Bangladesh Securities and Exchange Commission (BSEC), has emphasized the need for individuals to invest in the stock market rather than keeping their money stagnant in banks for a year. She pointed out that investing in the capital market is a viable option. Many people consider investing in land, gold, or depositing funds in savings accounts, which she discouraged.
Dr. Rumana made these remarks during a training event for students of Dhaka University’s Law Department held on Sunday, September 24. The event took place at the Kazi Motahar Hossain Building on the university campus and was organized by the DSE Training Academy. Dr. A.T.M. Tariquzzaman, Managing Director of Dhaka Stock Exchange (DSE), was a special guest at the training session.
Dr. Rumana, addressing the students, mentioned that by the year 2041, Bangladesh envisions becoming a highly developed nation, with a significant role for the capital market to play in its economic landscape.
Encouraging students to consider investment in the stock market as a means to grow their savings, Dr. Rumana Islam, Commissioner of the Bangladesh Securities and Exchange Commission (BSEC), highlighted the importance of proactively managing one’s financial future. She advised students to prioritize saving before spending, emphasizing that now is the time to shape their future. Dr. Rumana stressed the significance of making wise investment decisions, stating that if she had the capability to invest one lakh taka, she would risk only fifty thousand taka. In this case, the risk of 50 lakh takas cannot be taken.
During the event, Dr. A.T.M. Tariquzzaman, Managing Director of the Dhaka Stock Exchange (DSE), addressed the students as a special guest. He underscored the need for a robust legal framework to prevent malpractice in the stock market. Dr. Tariquzzaman emphasized that upholding the principles of legality and enforcement is essential for ensuring the security of investors, making it a primary responsibility.
In attendance at the training event, hosted by the DSE Training Academy at Dhaka University’s Kazi Motahar Hossain Building, was the Dean of Dhaka University’s Law Department, Dr. Shima Jaman; Chairman of the Law Department, Prof. Dr. Md Nazrul Islam; and DSE Training Academy’s Deputy General Manager, Syed Al Amin Rahman.
