Small investors lose $5 billion, stock exchange suspended, property collapsing soon

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By Lee Yen Nee- .16 hours 47 min ago

SINGAPORE — The Singapore Exchange yesterday suspended trading in three stocks — Blumont, LionGold and Asiasons — after shares of the commodity-investing companies plunged between 42 and 61 per cent, wiping more than S$5 billion in total off their market value.

The exchange said the three suspensions were to “safeguard the interests of the markets as there could be circumstances that would result in the market not being fully informed”.

Blumont tumbled 56.4 per cent to 88 cents per share before trading was halted in the morning, slashing S$2.9 billion from its market capitalisation and resulting in the investment firm calling off a takeover of Australian coal miner Cokal.

“The company’s share trading prices … have materially and adversely affected the commercial terms discussed with Cokal. In light thereof, the company and Cokal have agreed not to proceed with the transactions for the time being,” Blumont said.

The proposed S$146 million deal was announced by Blumont before trading started yesterday. Blumont had planned to pay for the takeover by issuing 72.2 million new shares at S$2.02 each — Blumont’s closing price on Thursday. Even so, Blumont and Cokal “continue to believe in the strategic merit” behind the now-cancelled deal and would continue to “explore opportunities for similarly mutually-beneficial transactions with each other”, the Singaporean firm said.

Blumont shares have risen from S$0.30 to S$2.45 apiece between Jan 2 and Sept 30 this year, before making a sharp U-turn on Tuesday after the SGX questioned the company over the “steep increase”. In the nine months to September, its market value increased 12.5-fold from S$508 million to S$6.3 billion, including new shares issued.

IG Markets strategist Kelly Teoh said investors are “not convinced” by the rise in Blumont’s share price, leading to many selling off its nil-paid rights, which offer investors the option to buy the underlying stock at a fixed priceover a specific period. Yesterday was the last trading day of the nil-paid rights.

Another analyst, who declined to be named, said: “Blumont has been quite a popular counter, but with this fiasco going on, the bets are off and speculators are more cautious now.”

In a separate filing yesterday, Blumont said its share price plunge in recent days may be related to the proposed Cokal deal, as well as the recent decision by a local brokerage to set trading restrictions on its stock. It did not name the brokerage, but a media report on Thursday said UOB Kay Hian had put the counter on a designated list, where online trading is not allowed and clients must pay upfront for their purchases beyond a certain amount.

Shares in gold miner LionGold Corp and its biggest shareholder, Asiasons Capital, yesterday plummeted 42.1 per cent and 61.5 per cent to 87.5 cents and S$1.04, respectively. That wiped off S$585 million from the market cap of Liongold and S$1.6 billion from that of Asiasons.

Liongold and Asiasons also attributed the recent volatility in their stock prices to the report that UOB Kay Hian had classified them as “designated stocks”. Like Blumont, the two companies had been questioned by SGX in recent weeks after the “substantial increase” in the share prices.

Asiasons added yesterday that there were “malicious market rumours” that the Monetary Authority of Singapore had sent a team to investigate the company, while LionGold said it was in advance talks to buy a stake in an undisclosed gold mining company that could potentially lead to a full takeover of the firm. “No formal agreement has been executed in connection with the acquisition yet,” LionGold said in its filing to the exchange.

The Securities Investors Association of Singapore (SIAS), which on Tuesday called on Blumont to give an acceptable explanation for the unusual price hike in the shares, failing which a probe of the firm should be conducted, yesterday reiterated its stance. It also suggested that the SGX introduce circuit breakers to automatically suspend trading of shares that have moved sharply higher or lower.

“A circuit breaker mechanism will certainly help to give early warning to investors,” said SIAS President and CEO David Gerald. WITH AGENCIES


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