Hot Stocks PN17 counters played up after Destini news ------------ Written by Janice Melissa Thean of theedgemalaysia.com

KUALA LUMPUR (Dec 4): Companies in financial distress and without a core business, classified as Practice Note 17 (PN17) on Bursa Malaysia, saw a surge in price and volume traded on Friday morning as traders attempted to attract retail investors.

At noon, SILVER BIRD GROUP BHD [], PATIMAS COMPUTERS BHD [] and Integrated Rubber Corp Bhd (IRCB) were among the biggest gainers in percentage terms, having gained as much as 180%, 42.86% and 12% respectively.

“There is a concerted effort by proprietary traders to play up the PN17 companies as the market is quiet at this time of the year, but they still need to trade,” SJ Securities Sdn Bhd senior remisier Goh Kay Chong told theedgemalaysia.com.

“These traders are pushing up such PN17 stocks in the hope that retail investors will jump in. Retailers will have to be very careful as regularisation of PN17 companies can take time,” said Goh, adding that penny stocks will see similar movement as low prices “represent low risks” to the traders.

In addition, the news on Destini Bhd applying to have its PN17 status lifted also fuelled interest in such companies. Destini announced two days ago that it had completed its regularisation and corporate exercises on Sept 13, 2012, and would apply to Bursa Malaysia to have its PN17 status lifted upon recording a net profit in the two consecutive quarters following the restructuring.
“Recently, PN17 status has been lifted much faster than before, indicating that the regulator’s attitude is changing,” observed a senior remisier with another securities firm. “Traders are capitalising on this piece of good news to induce retail investors to buy into such stocks.”

In the past, prices of most stocks jumped ahead of the news on the actual lifting of the PN17 status. Destini shares jumped from a low of 31.5 sen to 33 sen on Dec 31. Following its announcement on Jan 2, the share price rose again, closing at 35.5 sen on Jan 3.

According to Goh, such trading pattern is common now due to the January effect as the market begins to rally. Buoyant market sentiment may carry this trend through to the Chinese New Year period as many employees are given bonuses before the lunar festival, which falls on Feb 10 and 11.

At 2.04pm, Silver Bird shares had risen 4.5 sen or 90% to 9.5 sen on 27.18 million shares traded. Patimas, meanwhile, gained one sen or 28.57% to 4.5 sen with 47.15 million shares done. IRCB shares rose 0.5 sen or 4% to 13 sen on 11.1 million shares traded.