Karachi: In a confusing turn of events, only 500 shares of Pakistan International Airlines (PIA) were traded at the Pakistan Stock Exchange (PSX), but it led to a 37% increase in the company’s share price. The company is concerned that such an abnormal rise in prices can attract the attention of financial regulators, as it may be linked to share-price manipulation.
PIA management has now asked the Pakistan Stock Exchange (PSX) to investigate this matter.
A sudden increase
The national flag carrier in a notice to the stock exchange management pointed out that PIA’s B class shares were bought on December 10, 2020, at the rate of Rs 19.79 per share. After almost a week, on December 18, 500 shares were traded at Rs 27.24 per share. This was a 37 % increase in the prices between the two transactions.
Asked if this may have been due to share-price manipulation, Khurram Schezad CEO of Alpha Beta Core – an investment and research advisory institution – said “it is not impossible and this is exactly what happened in the shares of PIA. It may be because of low float, I believe, which gets the price to move, but it is still unclear.”
Interestingly, “no transaction has been recorded in the said shares during the month of December 2020 and January 2021. However, the closing price showed a consistent upward trend till January 19, 2021,” PIA explained in its notice sent to the PSX management.
“It is worth mentioning that the opening price during this period has constantly remained zero,” it added. Moreover, the entire price hike was achieved by trading only 500 shares. PIA said no major volume was traded yet the share price rose by 37.64 %.
PIA has issued 1499 million B class shares out of which 1462 million shares were held by the Federal Government. Only 37,000 shares are free float, and available for trading in the market.
“The number of free float PIA B shares held by the general public in such that no manipulation could effectively be managed thereof,” PIA added.
Talking about the impending investigation, Mr. Schezad said “Pakistan’s corporate regulatory framework is strong and well developed. It is developed with systemic improvements over time.
Usually, when such abnormality in trade is noticed, or on request of a company, the front line regulator and the management of the stock exchange conducts an analysis of the trade, its date, time, and its impact on the share price, and takes action in accordance with the regulations, experts said.
If the matter needs further investigation, the Securities and Exchange Commission of Pakistan (SECP) takes up the matter to safeguard investors’ interest
Stock market experts say the increase in price and the following investigation will certainly have a financial impact on PIA.