Price trading rules for Bursa?

By LOONG TSE MIN

Some retail investors believe counters with low share price and lacklustre trading should be de-listed.

PETALING JAYA: Trading volume in a number of lower liners has risen, with penny stocks such as Pilecon Engineering Bhd, PECD Bhd and Mesdaq-listed Wimems Corp Bhd now suspended from trading, having been heavily sold down to below 10 sen per share.

The feeling among some retail investors is that counters with low share price and lacklustre trading should be de-listed.

Apparently, the New York Stock Exchange (NYSE) has a “quantitative continued listed standard” rule to make it possible to de-list a stock that is trading below US$1 for 30 consecutive trading days.

So why not on the local bourse?

Bursa Malaysia Bhd chief regulatory officer Selvarany Rasiah said there was currently no policy on Bursa Malaysia to de-list penny stocks or securities that are trading below certain price levels.

“The present de-listing criteria are not based on price but on major non-compliance on the listed companies’ part with the Listing Requirements,'' she told StarBiz.

“The three listed issuers named are classified under PN17 and GN3 as the case may be, as having poor financial condition.”

Selvarany added that Bursa would continue to monitor developments domestically and internationally.

“Changes and improvements to the rules will be made as and when necessary, to keep pace with the changing market environment,” she added.

At present, Bursa has set several criteria and parameters, which if triggered, may result in the de-listing of a listed company.

These include failure to comply with specific rules stipulated in PN17/GN3 and PN16/GN2 (Cash Companies), and undercapitalised companies that have paid-up capital that is below the prescribed minimum paid-up capital of the respective boards.

Companies that fail to issue financial statements or other major non-compliance with the Listing Requirements may also trigger action to de-list.

Aseambankers Equity Research head Vincent Khoo told StarBiz he was not in favour of a de-listing criteria based on price or trading volume.

“It should be a matter of not meeting certain financial benchmarks and management (behaviour),” he said, adding that he personally felt that it was more up to the company rather than an issue of regulation.

“Since they are already trading on the exchange, it should really be up to the company directors to weigh the high cost of maintaining a listing versus the benefit, which is not so much if the share does not perform,” he added.

KSC Capital director of research Choong Khuat Hock said while it was true that there were price trading rules in the US market, a low trading price in Malaysia might not be a reflection of lower quality.

“They (Malaysian companies) are very clever in making share splits and bonus issues etc. which bring down the trading price.

“There is a perception here that with a lower share price, there is more interest in the stock,” he said.

Choong said when the market fell, many counters would inevitably trade below 10 sen per share, which might not necessarily reflect lower stock quality.