Thursday, April 24, 2008

Mena Holding: A Hostage of Burglars!

DISCLAIMER: I am not endorsing any stock in this post. I'm just stating actual facts!

I have a friend who's an active trader at the Kuwait Stock Exchange, and he told me this strange but usual story. Apparently, one of the listed companies on the KSE, Mena Holding, one of International Holding Project's Group, has had a stroke of luck during the past few weeks, and this man's been following it's progress, up to the point where he decided to buy into the stock. No Sooner had he done that, the stock soared every day to it's daily limit, until it reached KD1.280 on April 17th (Thursday). And that's when all hell broke loose!

Apparently, due to it's quick rise, the stock was halted by the KSE management, pending an inquiry into the company's documentation. So the company was instructed to disclose it's books, which it did, and everything checked out-according to my inquisitive friend, who was so concerned that he went frantic on the phone, calling up everyone he could think of, until he eventually discovered that the company's passed all the checks imposed onto it by the KSE's Legal Department.

As per the KSE requirements, it's supposed to release it's hold onto any company it's stopped for inquisitive proceedings, but for the last week, Mena Holding hasn't been released yet, leaving my friend with loads of money held up in a stock that's not active!

The suspicion, I imagine, would be that someone in the KSE management was eager to buy in on the winnings but didn't have the chance to buy the stock while it's at it's lowest, so using his or her influence at the KSE, the order came out to halt the company for some time, thereby reducing it's credibility and therefore it's share price, thus allowing him or her to buy into the stock at a lower price than it's last listed high.

The shame of it all is that Mena Holding is actually a good stock to buy into, especially since it was expected to reach KD 2.500 soon, but it's obvious that whenever a company's doing exceptionally good, some greedy microbe with power turns it into scrap just so he can catch up on his ill-gotten gains!

There's two things that can be learned from this course of events:
1-Don't invest in a company that's not so well-known.
2-Never invest in a company that's rising so high that it attracts the attention of some greedy pencil-pusher with power to control a company's future, and a massive ego!

FYI, to date, this is the longest time a company whose papers and books were all compliant was halted from trading for so long.

It's a shame our country is so full of corrupt people...a real shame!

3 comments:

momo said...

just some facts!

1. first, the "guy" in KSE you're referring to that couldn't buy the stock, the stock until the last day it was trading had a large trading volume that anyone could buy at the time!
2. there are many other companies that have been halted for a long time, for example: Ahlia investments, 7asebat (this stock has been halted for about 1 year now) but for different reasons.

the problem with KSE is that they didn't halt Mena holdings until it rose 500% in two months! which is very late. every stock exchange has to get any information if the a stock acts strange(up or down) this is to benefit share owners.
but of course KSE regulations always come late, or NEVER!

intlxpatr said...

I think a good rule is never to get involved in a market where transactions are not transparent nor evenly and rationally regulated and the playing field is not even for all investors.

Harry Kane said...

intlxpatr said...
"I think a good rule is never to get involved in a market where transactions are not transparent"

If I had followed your "good rule", I would be a lot poorer today. :-)

"and the playing field is not even for all investors."

An even playing field doesn't exist in any market. That doesn't mean there are no profits to be made for a person with no insider info.

And Momo is correct. Although a step in the right direction, halting Mena came way too late. I hope they halt stocks that recede in price for no known reason, as well.