The manipulation of the Kuala Lumpur Stock Exchange Composite Index (KLCI) has been going on for more than two months in the bid to lift the depressed market, according to economic analysts.

"It is a fact that someone is trying to lift the market by buying heavy chips and this buying of stock is not only limited to the final minutes before the end of trading. It is being done throughout the trading session," an analyst told malaysiakini today, on condition of anonymity.

The analyst, attached to a leading research firm in Kuala Lumpur, said the most favourite stocks involved in these final-minute buyouts are Telekom Malaysia, Maybank and Tenaga Nasional.

He added that this form of market manipulation was definitely illegal.

"However, I don't think these blue chip companies are involved in this practice," added the analyst. He believed that the manipulation was the work of certain players in the stock market.

The analyst said that previous last-minute buyouts were not as obvious as those that happened last Wednesday.

Strong rebound

Last Wednesday, the bourse rebounded strongly after institutional buying of Telekom Malaysia, Maybank and Tenaga Nasional stocks just minutes before the end of trading.

The Composite Index finished at 673.24 after experiencing a 23-month low of 638.51 earlier in the day. During the last 30 seconds before the market closed at 5pm, the index soared 13.18 points.

This has prompted a call for a probe into possible 'manipulation' by economist Ramon Navaratnam and opposition leader Lim Kit Siang.

Navaratnam, a former deputy secretary-general of Treasury and now corporate adviser to the Sunway Group, said that the late surge looked odd and unusual, and was worth an investigation for the sake of corporate governance.

DAP chairperson Lim also called on the Securities Commission to explain whether it had investigated and found any instance of market manipulation ([#1]Securities Commission quizzed on 'market manipulation'[/#], March 24).

"The three stocks (Telekom, Maybank and Tenaga) are government controlled and represent about 35 percent of the weightage of KLCI, giving considerable leverage to the government to manipulate the index," said Lim.

He added that an estimated RM19 million worth of purchases took place in the last three minutes on Wednesday for the shares of the three companies.

Easy way to boost index

According to the economic analyst, the last-minute buying of shares of certain major companies was the most easy and widely used method to increase the index.

He said this could be the work of individuals or by some large concerned parties.

"There are various ways to manipulate the market. Usually they are done by the operators. Even some companies can get friendly parties to buy and sell to increase their profile," he added.

An inside source close to the KLSE said the stock exchange as well as the Securities Commission could track down the persons involved in large selling or buying of shares.

He added that the authorities could have already started looking into the possible manipulation of the stock exchange by certain quarters.

"I don't see them coming out with statements as to what they are doing, but I am sure they are aware of the possible manipulations and will be looking into the people behind them," he said.

Officials from KLSE and the Securities Commission were not available for comment.