SINGAPORE (Reuters) - Three Singapore-listed companies resumed their steep decline on Monday as trading halts were lifted - suspensions which have raised more questions than answers about the stocks as well as how the country’s exchange regulates sudden price moves.
Blumont Group Ltd (BLUM.SI), Asiasons Capital Ltd ASNS.SI and LionGold Corp Ltd (LION.SI) have shed up to S$8.7 billion ($7 billion) in combined market value since Thursday’s close, transforming the companies back into the penny stocks that they once were before the strong run-up in their shares this year.
Trade in the firms - which have interests in resources as well as links to each other - were suspended by the Singapore Exchange Ltd (SGX) (SGXL.SI) on Friday in a rare move for the bourse and market regulator. Investors may not be fully informed of the companies’ affairs, SGX said then.
Some market players said the bourse appears to be cracking down on speculative trading and welcomed the move. Others questioned its handling of the matter.
“The trading suspension was quite drastic and it created panic last week. It was a sentiment killer. It not only affected the three stocks, but also a slew of small and mid caps,” said Roger Tan, chief executive of Voyage Research in Singapore.
“The suspension should have stayed for a longer time so the companies can make clarifications on a more fundamental level. Since you already suspended it, why not wait a while more?”
Both Blumont and Asiasons said the decline in their shares and the trading suspensions on Friday seem to have been precipitated by misunderstandings.
In an exchange filing on Friday, Asiasons said it had been informed that there were “malicious market rumours that a team from the Monetary Authority of Singapore has been sent to the company’s office to carry out investigations. The company confirms that such market rumours are false.”
The head of Blumont’s copper unit said in an email to Reuters that the plunge in the company’s shares appeared to have been caused by short-selling, and that the slump had nothing to do with the fundamental value of the Blumont Group portfolio.
Blumont, a diversified holding company, has lost S$6.2 billion in market value since hitting a record high a week ago.
LionGold, in response to SGX queries about trading in its share price, said on Monday that it was in talks with Minera IRL (IRL.LM) on a possible offer for the Latin American gold miner. It did not explain how the discussions might have caused the drop in its shares.
SGX performs a dual role as the operator of the city-state’s stock market and its regulator, which has in the past raised questions about whether it has a conflict of interest since it involves regulating listed companies that are also its clients.
Traders say SGX’s reputation took a hit after several Chinese companies listed on its market, known as S-chips, were embroiled in accounting scandals in 2008 and 2011.
Since then SGX has taken steps to improve corporate governance, including toughening its listing rules last year to attract larger firms on to its exchange.
On Sunday, SGX declared the stocks of Blumont, LionGold and Asiasons to be “designated securities,” meaning investors cannot short-sell them and purchases must be paid for upfront with cash. It was the first time in five years that it has declared any stocks as designated securities.
The exchange said it imposes such conditions when it believes there may have been market manipulation of the security, excessive speculation or if it is otherwise in the market’s interest to do so.
Still, the share price plunges and suspensions last week have raised concerns some shareholders may be unfairly burned.
“It doesn’t seem as though retail shareholders are getting the consideration that we think they deserve,” said Ian Curry, chairman of the Australian Shareholders’ Association.
LionGold and Blumont have Australian assets, and there are Australian shareholders who are exposed to LionGold, according to Australian media.
SGX had proposed in June to introduce circuit breakers for the securities market by the end of this year.
Shares in Blumont tumbled as much as 87 percent in Singapore on Monday, while investment firm Asiasons dropped 92 percent and LionGold fell 71 percent.
Blumont’s share price plunge and suspension caused it to call off a proposed S$146 million ($117 million) takeover of Australian-listed coal explorer Cokal (CKA.AX). Blumont’s copper unit said, however, there was no change to its plan to invest $108 million in Botswana copper miner Discovery Metals DML.AX.
Other shares that suffered in the wake of the suspensions included Innopac Holdings Ltd (INPS.SI), which lost as much as 42 percent in early Monday trade. ISR Capital (ISRC.SI) dropped as much as 47 percent. Both were queried by SGX on Friday about recent trading in their shares.
Innopac is an investment firm that started out as a Kentucky Fried Chicken franchisee in Singapore before it divested that interest, while ISR invests in natural resources. Officials for both firms were not immediately available to comment.
Several of the SGX-listed companies experiencing dramatic price falls over the past two trading days are linked to each other. Asiasons is LionGold’s biggest shareholder with an 8.7 percent stake as of August 30, according to Thomson Reuters data.
Asiasons is also the biggest shareholder in ISR, while LionGold has a stake in Innopac. Blumont and LionGold have a non-executive independent director in common.
($1 = 1.2458 Singapore dollars)
Additional reporting by Anshuman Daga and Rujun Shen in SINGAPORE and Sonali Paul in MELBOURNE; Writing by Edwina Gibbs; Editing by Ryan Woo