Stocks of Khulna Printing & Packaging Ltd (KPPL) tripled in the past month despite the facts that it is languishing as a junk stock in the "Z" category, its operations have been shut for years, and there have been no positive developments about the company in recent times.

Regarding the recent surge in its stock price, KPPL responded to a Dhaka Stock Exchange (DSE) notice yesterday saying it had no undisclosed price-sensitive information.

Nonetheless, the printing company's shares surged by around 10 percent to Tk 20.6 yesterday, marking a threefold increase from their starting point of Tk 7.2 last month, according to DSE data.

In August last year, the DSE said one of their teams had visited KPPL's factory and head office in February 2023 to assess its operational status, only to find the facilities closed.

The company's operations remain suspended mainly due to the freezing of its bank accounts in 2021.

That year, KPPL disclosed that a court had ordered all bank accounts belonging to chairman SM Amzad Hossain and associated entities to be frozen.

In recent times, rumours have been circulating that the company's bank accounts may be reopened, meaning production may subsequently resume.

However, the company has not confirmed any such development, according to a top official at a leading brokerage firm who requested anonymity.

Md Sajedul Islam, a former vice president of the DSE Brokers Association, said: "If the company regains access to its bank accounts, it would suggest the stock price has been rising due to insider trading."

Insider trading is the illegal practice of trading on the stock exchange to one's own advantage by accessing confidential information.

He commented that while institutional investors are maintaining a cautious stance, general investors are now chasing rumours, creating an opportunity for certain individuals to exploit the situation by spreading misinformation.

"Typically, general investors lose money in such scenarios. So, they should exercise caution when investing in such stocks," Islam added.

After being listed on the exchange in 2014, the company paid a 15 percent cash dividend for its first two years. However, over the last four years, KPPL has not paid any dividends.

"When a company has been closed for several years, reviving its operations is highly challenging, even if its bank accounts are unfrozen," a merchant banker said.

"Investors should not assume that the company will immediately begin providing dividends after resuming operations."

The merchant banker further said that if the bank accounts remain frozen, all this speculation would likely lead to financial losses for investors.

"Investors should behave rationally. While this company's future remains uncertain, the market offers numerous good banks and manufacturing companies with stocks available at low prices," he added.

"These companies provide regular dividends. When you have a more secure investment option, why chase speculative stocks?" he questioned.

"It's purely because some people seek quick profits, which is a risky approach to the stock market."