SEC to probe sharp price rise in some issues

MANILA, Philippines - Given the astronomical rise in the share prices of small-cap issues, the Securities and Exchange Commission (SEC) is probing the movement in these penny stocks.

A large number of penny stocks have seen a stratospheric rise in the past week or so with speculators hoping to turn price swings of a few cents or pesos into big profits through high volume trades. Some of them have more than doubled, tripled or quadrupled since the first week of October.

A high-ranking SEC official said the corporate watchdog agency is looking into the unusual trading activity of these penny stocks which include once dormant firms Atok-Big Wedge Co. Inc., and Macondray Plastics Inc.

The same official, however, pointed out that this inquiry is just part of a routine audit and does not necessarily mean the two companies had committed trading irregularities.

Share prices of Macondray and Atok have been on an upward trend, hitting the upper circuit filter daily since they made big announcements about their future prospects. Both companies are subject of a takeover by the group of former trade and industry minister Roberto V. Ongpin and the UK-based investment firm Ashmore Management.

From only P3 in Oct. 12, Macondray has risen five-fold closing at P15 Friday or 50 percent higher than Thursday’s close of P10 each share on volume of 43,000 shares valued at P610,500.

Atok, on the other hand, surged to P21 Friday, up 50 percent from PP14 the previous day and nearly five times its Oct. 9 level of P4.25 each share.

The Ongpin-Ashmore Group is acquiring at least 66 percent and 80 percent of Macondray and Atok for P218.78 million and P60 million, respectively. The move is in line with the group’s strategy to further build up its investment portfolio, which includes Philex Mining Corp., oil refiner Petron Corp., San Miguel Corp., Philweb and ISM.

Both Atok and Macondray told the Philippine Stock Exchange (PSE) that they were not aware of any material information or event that might have caused the unusual movement in the trading of their shares in the market. They have also committed to continue to provide timely and material information as they occur.

Aside from Atok and Macondray, another penny stock on the rise is Medco Holdings Inc. on talks that a sale and purchase agreement is forthcoming between its majority shareholder, the Lippo Group, and Banco De Oro with respect to Export and Industry Bank.

Just last Friday, five other penny stocks hit or nearly reached ceiling limits. They are MRC Allied Industries Inc., BHI Holdings Inc., Mabuhay Holdings Corp. and Central Azucarera de Tarlac.

Although their prices rarely go up, appetite for these zombie stocks has soared, fueled almost exclusively by speculation at the hands of aggressive day traders operating alone or on specialized desks at trading firms.