Cannasouth shares blaze dizzying trail
NZX issues ‘please explain’ after stock yo-yos within 41% range
Cannasouth investors got a taste of life at the speculative end of the share market when the newly-listed cannabis research stock traded in a gaping 41 per cent range on the day.
Shares in Cannasouth, which develops medicinal cannabis treatment options for clinicians, doctors and patients, hit a high of 84c, then a low of 53c.
The stock finished at 54c, down 21c or 28 per cent on Monday’s close, on volume worth $2.2 million.
Yesterday the stock
jumped 29 per cent to 75c on a volume of 2.3m shares, its busiest day since listing in June. The extreme trading in Cannasouth over the last few days drew a “please explain” request from the NZX.
NZX Surveillance noted the share price had rallied by 85.2 per cent from September 2 to Monday this week.
A notice from the NZX asked if Cannasouth continued to comply with the exchange’s listing rule covering disclosure.
NZX listing rules require firms to promptly release information material to them through the exchange. They are also obliged to release information if trading in their stock is being materially influenced by false or misleading information, that otherwise appears to have come from credible sources.
Cannasouth’s legal counsel replied that the company was in compliance.
The stock started rallying last week on the back of a report from the independent think tank, the Helen Clark Foundation, backing the case for the regulation of, and access to, a legal cannabis market.
The Clark report dealt mostly with recreational cannabis use, although it did say prohibition had impeded access by pharmacologists and researchers.
“Internationally, access to the substance for research can be costly and time consuming,” the report said.
“Therefore, while cannabis is the most-used illegal drug in New Zealand and globally, existing scientific literature about it is limited,” the report said.
Cannasouth shares were issued at 50c and rallied to 51c when they debuted on the NZX in June.
A month later, they had slumped to 29c.
In the leadup to its listing, Cannasouth emphasised that it was an early-stage company that faced a lot of uncertainty in the medical cannabis space.
“There are regulatory risks and there is competition that we need to be aware of, but there is also at the end of the day opportunity as well,” chief executive Mark Lucas told the Herald on the day the stock listed.