KARACHI: The compliance department of the Pakistan Stock Exchange (PSX) has sought a clarification from five listed companies for a “substantial” change in their share prices between March 16 and April 13.

One of the five companies is Pakistan Services Ltd (PSEL), which owns and manages the chain of Pearl Continental hotels in Pakistan. It has a free-float of 60 per cent, which means the company’s sponsors control only 40pc shareholding while the rest is available to the public for trading.

“The PSX has observed that the price in the shares of PSEL has decreased substantially during the period from March 16 and April 13,” said a letter to the company sent by PSX Head of Listed Companies Compliance Hafiz Maqsood Munshi on April 20.

Under the prevailing Securities Act, listed companies are required to promptly disclose to the general public if it observes any unusual movement in the price or volume of its traded securities. The company must share with the general public the details of any matter or development that is — or may possibly be — relevant to the unusual movement in price or volumes.

Otherwise, the company should issue a statement of the fact that it’s not aware of any such matter or development.

The share price of PSEL was Rs1,720.50 at the close of the March 15 session. It dropped to Rs800.10 apiece by the end of the April 13 session, showing a decrease of 53.5pc in less than a month.

The PSX directed PSEL to furnish “at the earliest” the reason or any material information, which may have resulted in the substantial decrease in its price over the period under consideration.

Capital market regulators around the world keep an eye on any sudden share price movements to protect small investors from fraud. They require every listed company to immediately share with the public any new development that may have a material impact on its stock price.

The regulatory requirement is aimed at preventing insider trading, which involves buying and selling of shares by someone with non-public but material information about the stock undergoing a sharp change in its price or trading volume.

The PSX also asked Tandlianwala Sugar Mills Ltd (TSML), a producer and seller of white crystalline sugar and ethanol with a free-float of only 5pc, to explain the substantial increase in its share price between March 16 and April 13.

There was no trading in the TSML share on March 15 or 16. Its closing price on March 17 was Rs67.03 apiece. It rose 50.3pc to Rs100.79 a share by the end of April 13.

The third company to receive a letter from the PSX compliance department was Towellers Ltd, a manufacturer and exporter of textile make-ups, garments and towels. Its share price rose from Rs183 on March 15 to Rs291.16 on April 13, up 59.1pc in the period under review.

The PSX asked Khairpur Sugar Mills Ltd, a seller of sugar and by-products with just 5pc of free-float, to explain why its share price rose from Rs46.22 on March 15 to Rs72 on April 13, reflecting an increase of 55.7pc in about a month.

The stock exchange also sought an explanation for a substantial share price increase from Metropolitan Steel Corporation Ltd, which makes ribbed bars, wire rods, bailing hoops, wires, transmission towers and cold profiles.

There was no trading in the steel maker’s share on March 15. But the closing rate on March 16 was Rs22.19. Its closing rate on April 12 was Rs35 apiece, which shows the increase in the stock rate was 57.7pc over the period under review. Its shares weren’t traded on April 13.

Published in Dawn, April 25th, 2023