Thursday, June 9, 2011

The scandal of the Sri Lanka stock brokerage industry - example

The SEC is a joke run by jokers for jokers.

Today by 1pm this market has had traded Rs1.5B of shares in a tin-pot company called Pan Asia Power amounting to about 180M shares which amounts to about 40% of the share value of the Rs4B company at the current share price.

This is a penny stock and we are in a penny stock blow out. Why does the SEC and CSE not worry about it. It is simply called greed. They earn money from the share trading and they could not care a toss what shares are traded. Best of all for them, they have even included these shares in the band where the share cannot rise or fall more than 10% in the day. This after the shares went up 80% on one day fueled by a speculative buyer buying a huge chunk of about 15% of the company at Rs6 per share. This was on the day the share rose to Rs8. The brokers collectively will earn at least 1.3% (buying and selling broker) amounting to Rs20M. No useful purpose will be served to the industry in this game.

That is a lot of jam for one share in an insignificant new company that is not making any money and is a proposed mini hydro project.

If one cannot call it speculation what is it? All in favor of brokers and I bet few punters would have made any money.

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