Three sgx stocks plunge Those who had bought SGX stocks like Blumont Group, Asiasons Capital and Liongold can not sleep well these few days because the share price dropped until those investors want to cry because the share price was dropping like fallen airplane. SGX decided to halt the trading on these three stocks earlier, there might be some reasons behind. According to today on line "...nosedived further as trading resumed yesterday after the Singapore Exchange (SGX) lifted suspensions on the counters, wiping off another S$3.3 billion from their combined market value following Friday’s S$5.1 billion rout.
In a twist to the developments late yesterday, Blumont said in a regulatory filing with the SGX that veteran natural-resources industry entrepreneur and former Citibanker Alex Molyneux had agreed to join the company as its chairman, bringing with him extensive experience to lead the group.
Mr Molyneux, whose appointment takes effect upon the completion of the share purchase, said: “I have watched Blumont for some time and am a believer in its business model. This is a company fast on its way to being Asia’s first diversified natural-resources champion. With the unusual share-price drop, this is (the) right time to get involved.”
The SGX had declared Blumont, Asiasons and Liongold as “designated securities” on Sunday after suspending trading of the stocks on Friday amid extreme volatility, in order to “safeguard the interests of the markets, as there could be circumstances that would result in the markets not being fully informed”.
The exchange takes such action when, in its opinion, there has been manipulation or excessive speculation in the security, or if it is desirable in the interests of markets. The regulator did not comment on whether investigations into the three counters were ongoing or would be initiated, but it said it would continue to monitor the trading of these securities and review the circumstances in due course.
When a stock is “designated”, sellers must hold the quantity of shares they want to sell, thus blocking short-selling, and buyers have to make cash payments for the purchases. Online and contra trading may also be curbed for such shares.
Blumont and Asiasons, which started trading when the market opened yesterday, plunged 85.2 and 85.6 per cent to close at S$0.13 and S$0.15 per share respectively. LionGold’s shares plummeted 71.4 per cent to S$0.25 after an extended trading halt that was lifted at 2.45pm. The two-day sell-off saw the companies return to the penny stocks that they were, before the speculative surge this year that lifted them to the billion-dollar club.
In addition to the trading curbs, decreasing investor confidence in the fundamentals of the three firms was a greater contribution to the plunge in their prices yesterday, analysts said.
“I don’t think it’s just about SGX designating the stocks, but more the fall in confidence due to the chain of events that took place since last week,” said Mr Roger Tan, CEO of Voyage Research.
Shares of the three firms experienced a surge in prices this year before a steep U-turn last week saw billions wiped out in their market value, leading to SGX’s query, suspension and subsequent classification as “designated”.
Analysts said events of the past week had dented confidence in smaller listed companies, although broader market confidence was largely unshaken and more linked to external events, such as the US fiscal crisis. While there was extreme volatility in the designated securities and penny stocks, the Straits Times Index ended flat yesterday.
Blumont, whose market value had fallen from about S$5.1 billion at the close of the market on Thursday to roughly S$330 million, said yesterday its plans for a US$108 million investment in Botswana copper miner Discovery Metals were not affected.
LionGold, whose market capitalisation fell from S$1.4 billion to S$230 million in the last two trading days, had said on Friday it was in advanced talks to buy a gold-mining company. Yesterday, it named the target as Peru’s Minera IRL, but added that the discussions might not necessarily result in a deal. Asiasons’ market value plunged from S$2.6 billion on Thursday to S$146 million yesterday.