Singapore’s Blumont, Asiasons Shares Plunge; Sentiment for small-cap stocks hit; Ossia International, Asia-Pacific Strategic Investments queried by SGX over “substantial” share price falls

October 6, 2013, 10:42 p.m. ET

Blumont, Asiasons Shares Plunge

Companies Lose More Than 85% of Respective Share Values After Trading Resumes

CHUN HAN WONG And JAKE MAXWELL WATTS

SINGAPORE—Blumont Group Ltd. A33.SG -75.57% and Asiasons Capital Ltd.5ET.SG -74.04% lost more than 85% of their respective share values on early Monday, after the Singapore Exchange S68.SG +0.28% lifted trading suspensions on both stocks and applied stricter trading rules to them. Blumont’s share price dropped by as much as 85% to 12.8 Singapore cents (10 U.S. cents), down from S$0.880—its last traded price before its suspension on Friday. Shares of Asiasons lost as much as 90% of their value, falling to 10 Singapore cents, compared with the S$1.04 last traded price on Friday before the suspension.Trading in shares of sterilization-services provider Blumont, asset-management and investment firm Asiasons and LionGold Corp.A78.SG -42.05% was halted Friday after their prices tumbled more than 40% early in the day, wiping out a combined S$4.8 billion in market value and months of big share-price gains.

Singapore Exchange allowed all three stocks to resume trading Monday but barred short selling and margin trading in these counters, declaring them “designated securities” subject to stricter rules and added scrutiny.

LionGold, an investor in gold-related businesses, has yet to resume trading after calling for a trading halt before the market opened Monday, pending an announcement. It fell 42% on Friday to S$0.875 before trading was suspended.

Under SGX rules, the exchange can declare a company’s shares designated securities, if in the exchange’s opinion, “there has been manipulation of the security, excessive speculation in the security or it is otherwise desirable in the interests of markets.”

The short-sale ban will require that sellers of the three stocks already own the shares they wish to sell. In short selling, an investor borrows a security from a broker in order to sell it, hoping to buy it back later at a lower price to repay the broker. The investor pockets the price difference between the two transactions.

Buyers of the three stocks will also have to pay cash immediately to settle the trades upon execution, rather than buying on margin, or using borrowed money.

SGX’s designated-securities framework also bars online trading and contra trading. In a contra trade, an investor offsets an earlier share purchase with an equivalent sale before the initial deal is settled; this allows an investor to book profits without committing any capital, as long as the selling price is higher than the purchase price.

Blumont, Asiasons shares resume slide as SGX lifts suspensions

Sun, Oct 6 2013

* Blumont, Asiasons shares extend steep slide on Monday

* Sentiment for small-cap stocks hit by the trading halts

* Market puzzled by temporary nature of SGX share suspension (Rewrites throughout with details)

By Rachel Armstrong and Eveline Danubrata

SINGAPORE, Oct 7 (Reuters) – Two 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.

Shares in Blumont Group Ltd, a diversified holding company, tumbled as much as 87 percent, while investment firm Asiasons Capital Ltd dropped more than 90 percent.

A third company hit by the suspensions imposed on Friday, gold miner LionGold Corp Ltd, remained untraded after asking for the halt to continue, pending an announcement.

The three companies had seen strong run-ups in their stocks this year before the Singapore Exchange Ltd (SGX) suspended trading. SGX said the market may not be fully informed of the companies’ affairs after a plunge in their share prices on Friday.

SGX-directed trading suspensions are fairly rare. While some traders have said the bourse appears to be cracking down on speculative trading, others question 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.

SGX said on Sunday it would lift the trading suspensions, but shares in the three companies would be declared “designated securities,” meaning investors cannot short-sell them and purchases must be paid for upfront with cash.

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.

RIPPLE EFFECT

Other shares to have suffered in the wake of the suspensions include Innopac Holdings Ltd, which lost as much as 42 percent in early Monday trade, and ISR Capital which dropped as much as 47 percent.

Some of the companies are linked to each other. Asiasons is LionGold’s biggest shareholder with an 8.7 percent stake as of Aug. 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.

Blumont’s share price plunge and suspension caused it to call off a proposed S$146 million ($117.19 million) takeover of Australian-listed coal explorer Cokal – an agreement that it had just announced on Friday.

Blumont’s copper unit said, however, that there was no change to its plan to invest $108 million in Botswana copper miner Discovery Metals.

LionGold Corp is in advanced discussions to buy small Latin American gold miner IRL, IRL confirmed on Friday.

Blumont’s stock was trading as low as S$0.115 in early Monday trade. Asiasons’s low was at S$0.085. ($1 = 1.2458 Singapore dollars) (Additional reporting by Anshuman Daga in SINGAPORE and Sonali Paul in MELBOURNE; Writing by Edwina Gibbs; Editing by Ryan Woo)

Ossia International, Asia-Pacific Strategic Investments queried by SGX

Published on Oct 07, 2013
By Fiona Chan

Two firms listed on the Singapore Exchange (SGX) were queried by the bourse over “substantial” share price falls on Monday. Ossia International, a regional distributor and retailer of fashion, accessories and sporting goods, was queried after it fell as much as 26 per cent to 25.5 cents in the first hour of trading. The counter later narrowed the loss by recovering to 44 cents as at 11.30am. Ossia responded within an hour of the SGX query to say it was not aware of any information or any other possible explanation for the trading. The other counter that was queried was Asia-Pacific Strategic Investments, which provides bereavement services in the region.

Blumont Plunges With Asiasons as Singapore Curbs Their Stocks

Blumont Group Ltd. (BLUM) and Asiasons (ACAP) Capital Ltd. shares fell by a record after resuming trading as the Singapore Exchange Ltd. imposed restrictions on investors of their stocks.

Blumont, which invests in minerals and energy, slumped 82 percent to 15.7 Singapore cents as of 10:25 a.m. in Singapore, extending a 56 percent decline on Oct. 4. The two-day, 92 percent drop shaved S$4.8 billion ($3.8 billion) from its market value. The plunge also prompted the company to scrap a deal to buy Australia’s Cokal Ltd. (CKA) for S$146 million.

The exchange said yesterday shares of Blumont, Asiasons and LionGold (LIGO) Corp. have been declared designated securities, prohibiting investors to sell them unless they hold the same quantity of stock. Buyers must make cash payments for the transactions, it added.

“SGX is telling investors to be mindful of the risks involved in investing in these volatile stocks,” said Desmond Chua, an analyst at CMC Markets in Singapore, referring to the Singapore Exchange. “This would help to ensure proper corporate governance in particular companies.”

Trading of the three commodity investors were suspended by the exchange on Oct. 4 to safeguard market interest.

“SGX will continue to monitor the trading of these designated securities and review the circumstances in due course to end the declaration,” the exchange said in the statement yesterday.

Asiasons, which last month bought a stake in U.S.-based oil and gas producer Black Elk Energy Offshore Operations LLC, tumbled 88 percent to 12.5 Singapore cents, adding to a 61 percent plunge on Oct. 4.

Circuit Breakers

LionGold, which slumped 42 percent on Oct. 4, requested for a trading halt today. The company said last month it was in talks to buy as many as three gold mining assets.

While existing regulations in Singapore are sufficient for company disclosures, regulators may need to introduce circuit breakers to automatically suspend trading of shares that have moved sharply higher or lower, David Gerald, president of Securities Investors Association of Singapore, said Oct. 4

“A circuit breaker mechanism will certainly help to give early warning to investors,” Gerald said in an e-mailed response to queries.

Regulators around the world have stepped up oversight of capital markets after the global financial crisis in 2008. The MAS established a 13-member council in 2010 with a goal to boost corporate governance standards and investor confidence.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

One Response to Singapore’s Blumont, Asiasons Shares Plunge; Sentiment for small-cap stocks hit; Ossia International, Asia-Pacific Strategic Investments queried by SGX over “substantial” share price falls

  1. Marilyn student says:

    I found blumont disturbing, I also found that the revenue 4 m, revaluation gains 33m. Forced selling before the price drop. Rights isdue 5cents. I means who would go to buy? My ideas are, the had aggressive investments in minerals, I looked tbrough their site, as you know well, lets make refere ce to oil companies, the get lease hoping to strike gold. However, sometimes its just litlle gold n rocks. One way I call it creating value, big up these, n than get them revalued highly, than investors buy up their shares n use that value to buy up real companies with real gold. I am very sure this was a risk they took, I might say dangerously. One smart alex could see this. So now it goes back to true value previously. I hope investors will learn that you must understand a company. Overall, I am most doubtful that its illegal. But I guess most companies arent that very agreesive to this I one year. I am really curious of the value of their investments now that tnd share price has dropped? Will it be 33m? Going forward?

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