Trick at Alro

Aluminium producer Alro Slatina on Friday “offered” the brokers one of the strangest days in their career. The trading session opened with Alro announcement of share capital increase by 2,558 billion lei, derived from the re-assessment.

The increase was to be operated by granting 3.2 new shares for each owned share and the purchase deadline was March 16. Nothing seemed to be unusual till the Stock Exchange decided to temporary stall the shares from trading, as a first stage, in order to avoid large speculations.

This decision came when a lot of brokers had already received sell orders at prices between 22,000-23,000 lei, which were rather low given the prospective of the planned share capital increase. Consequently, on Friday session, several brokers simultaneously withdrew the sell orders and purchased Alro shares.

“We were counting on the announcement having caught many brokers with sell orders on the market and we waited for the trades with Alro shares to be resumed, so that we could further buy,” Razvan Pasol, Intercapital Invest General Manager said.

The Stock Exchange announcement of adjourning trades with Alro shares for Monday (today, i.e.) was a release.

The most interesting part of the announcement was that the Monday session was to be preceded by a 30-minute pre-opening, instead of the usual 15 minutes, in order to allow the brokers to withdraw the initial sell orders and that the permitted 15% fluctuation margin for a trading session was to be suspended until March 16, which was an unique event in the history of the Stock Exchange.

The brokers have certainly spent their weekend thinking of a trading strategy and trying to estimate the peak of Alro shares. The most promising trading week for Alro shares actually turned out to be a practical joke, as the company on Friday night sent a release reading that the former announcement of the share capital increase was just a mistake.