Pressure is mounting on the Securities and Exchange Commission (SEC) and the Colombo Stock Exchange (CSE) to probe alleged manipulation, following the bizarre share price rise of small-scale LOLC Development Finance PLC (NIFL).
Now ranked as the fourth most valuable listed stock on the CSE, the share price of NIFL rose further yesterday by 25%, or Rs. 123.75, to close at Rs. 618.75. In comparison to its end-May price of Rs. 73, yesterday’s closing saw a scarcely credible total gain of 747% in a little under a month.
Only 16,835 shares of NIFL changed hands via 569 trades for Rs. 9.8 million. Its market capitalisation amounted to Rs. 147.2 billion (far above most-profitable and biggest bank Commercial’s Rs. 100.9 billion) up from Rs. 117.7 billion on Monday. At end-May it was Rs. 17.3 billion. NIFL is only behind parent LOLC, JKH and CTC.
Most investors, analysts and brokers were dumbfounded over the rise, with many insisting the SEC and CSE launch a thorough investigation to ascertain if there was manipulation.
“The recent gain in ASPI is misleading given NIFL’s weight on CSE,” some alleged, adding it was detrimental to the market.
However, despite NIFL’s gain, the ASPI dipped yesterday.
The NIFL stock is highly illiquid since the public holding is just 0.11% held by 243 shareholders. LOLC Group controls the rest.
For a CSE query on Monday after many weeks on the unusual rise, NIFL said there was no undisclosed price sensitive information being withheld by the company.
“We presume that the year-end performance of the Company and that of the LOLC Group may have led to speculation in the market, which would have resulted in the unusual trading activities in the securities of the company,” NIFL Chairman Kapila Jayawardena said in response to the CSE inquiry.
(FT)