Blumont

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By Eveline Danubrata and Clare Baldwin

SINGAPORE/HONG KONG, Oct 11 (Reuters) - Several brokerages in Singapore could lose millions of dollars in the wake of recent sharp price falls in three stocks, traders said, and as the stock exchange probes short-selling in two of the stocks early this week when they were subject to trading curbs.

Singapore Exchange Ltd (SGX), both the market operator and regulator, suspended trading in shares of Blumont Group Ltd, Asiasons Capital Ltd and LionGold Corp Ltd last Friday following the big price moves. On Sunday, it declared them "designated securities" - its first such move in five years.

Under the rules imposed by the SGX, traders cannot short-sell the stocks and buyers have to pay cash up-front. Once bought, the shares can't be sold until they are deposited into the buyer's account, at least three days later.

Traders now say there is widespread confusion over the trading curbs, and particularly over when they were allowed to sell. Some bought shares after the trading suspension was lifted on Monday and sold on the same day - so falling foul of the SGX rules and risking a fine.

"Owing to the confusion, many clients have sold these securities before the due date," Jimmy Ho Kwok Hoong, President of The Society of Remisiers (Singapore), wrote in a letter to The Straits Times on Friday. "They now run the risk of a possible buying-in with fines for short-selling, unless the SGX makes an exception to the rule for these trades."

All this comes on top of trading losses racked up when these three stocks crashed. All have dropped by more than 80 percent since last Thursday's close, turning them back into the penny stocks they were before their dramatic gains in recent months - a surge analysts said was not backed by business fundamentals.

Some brokerage clients have refused to pay up, or have disappeared, three traders told Reuters on Friday. Individual traders, or remisiers, who have to foot the bill may have to declare bankruptcy or sign a bond to pay off what they owe in installments to the brokerages.

"Because SGX lifted the suspension so quickly (on Monday), there wasn't time for information to be disseminated down the stream," said one of the Singapore traders. "The brokers are further down the food chain than the credit department, and even the credit department, which has to control the limits, wasn't really clear about the rules."


"APPROPRIATE ACTION"

It's also unclear how they should now be dealing in the three companies' shares.

The SGX said late on Thursday it would take appropriate disciplinary action as part of its investigation into short-selling of Blumont and Asiasons stocks, though it did not say what those measures would be.

One trader said the SGX is also asking for the names and addresses of people using direct market access (DMA) to trade in the shares. Investors use DMA to electronically trade large blocks of stock quickly, cheaply and without identifying themselves to the market.

The SGX, which allowed DMA trading in September 2012, has the right to request identifying information, but rarely does so, the trader said. A spokeswoman for the SGX said it is standard procedure "to call on all our member firms to check on orders and trades executed in our markets."

Lee Porter, managing director at Liquidnet Asia Pacific, said such requests are more common in other exchanges. "If there's any wild swings in prices it's not unusual for regulators to ask brokers who their underlying customer was," he said.

The SGX said it uses the "designated securities" classification when it believes there may have been market manipulation of a stock, excessive speculation or if it is otherwise in the market's interest to do so. It said on Thursday it was monitoring the market in the three stocks, and would lift the designation "as soon as it is appropriate to do so." (Additional reporting by Nishant Kumar in HONG KONG; Editing by Rachel Armstrong and Ian Geoghegan)
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After all that has happened in the last 2 weeks, are there still any good reasons to want to invest in Blumont Group, Asiasons Capital and LionGold Corp?

I guess most serious and value-oriented investors have better targets and things to do!

For those who have lost a bundle - including the controlling shareholders/directors of these 3 companies; their friends/supporters including those foreign funds/institutions which have taken up stakes in these 3 companies; and those remisiers/traders who have been trading and supporting these 3 counters on a daily basis, and others who got sucked in by the euphoria when the share prices were on the way up - for sure they have learned a bitter lesson on betting on stocks/investments which have gone terribly wrong. Those broking houses and financiers which have big indirect exposures as a result of their dealings with and/or financing the about parties, will likely have to suffer losses too. Indeed, in this 3 cases, Mr Market has little mercy for those involved.
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indeed..i was almost persuaded by a recent known contact to buy ipco and blumonth & asiaons.
luckily I wasn't greedy and avoided this episode.

what do u think of ipco? this was not mentioned in the above reuters news
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(12-10-2013, 03:02 PM)pianist Wrote: Under the rules imposed by the SGX, traders cannot short-sell the stocks and buyers have to pay cash up-front. Once bought, the shares can't be sold until they are deposited into the buyer's account, at least three days later.
Some bought shares after the trading suspension was lifted on Monday and sold on the same day - so falling foul of the SGX rules and risking
Can someone enlighten me the definition of short sell? I didn't know buy and sell a stock on the same day is considered as short sell. I always thought sell and buy back is considered as short. Sometimes I buy a stock with intention of holding but if it shoot 30% up on that same day naturally I will sell.

1)if i hv shares in my cdp acct and I sold and buy back on same day is it considered short?
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heard from sj forum ""one singapore unit of one Malaysian broking house was said to have been hit so hard that its senior management had to fly in from Kuala Lumpur to discuss a potential capital injection.

Their clients or themselves must be holding huge positions bought at pre-crash price levels.""
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(12-10-2013, 10:58 PM)Bibi Wrote:
(12-10-2013, 03:02 PM)pianist Wrote: Under the rules imposed by the SGX, traders cannot short-sell the stocks and buyers have to pay cash up-front. Once bought, the shares can't be sold until they are deposited into the buyer's account, at least three days later.
Some bought shares after the trading suspension was lifted on Monday and sold on the same day - so falling foul of the SGX rules and risking
Can someone enlighten me the definition of short sell? I didn't know buy and sell a stock on the same day is considered as short sell. I always thought sell and buy back is considered as short. Sometimes I buy a stock with intention of holding but if it shoot 30% up on that same day naturally I will sell.

1)if i hv shares in my cdp acct and I sold and buy back on same day is it considered short?

From the horse's mouth,
http://rulebook.sgx.com/en/display/displ...93&print=1

8.8 Designated Securities and Futures Contracts

8.8.2
(4) a prohibition on any sale unless the seller holds the Designated Security or Designated Futures Contract, or in the case of a Designated Futures Contract, the underlying. A seller holds the security, Futures Contract, or underlying if, at the time of sale, he has the securities, Futures Contracts, or underlying in an account maintained with CDP (if scripless), or delivers the share certificates and executed transfer forms to the Trading Member.


If the stock is designated by SGX, then the stock can only be sold if you hold it in your CDP account.
In the situation of same day buy and sell of designated stocks, the trader does not have the stock in the CDP account yet and therefore, it will be classified as short selling.

Till date, the trading accounts are not linked to CDP accounts for retrieval of information. The above situation will not happen if the brokers have the traders' CDP holding information.
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(12-10-2013, 11:29 PM)pianist Wrote: heard from sj forum ""one singapore unit of one Malaysian broking house was said to have been hit so hard that its senior management had to fly in from Kuala Lumpur to discuss a potential capital injection. ""

That is a very big hint.....Tongue
My Dividend Investing Blog
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(13-10-2013, 09:25 AM)yeokiwi Wrote: Till date, the trading accounts are not linked to CDP accounts for retrieval of information. The above situation will not happen if the brokers have the traders' CDP holding information.

Should brokers have the accounts holdings information? Think sometime back there was a discussion about this? What is the result?

(13-10-2013, 09:31 AM)Dividend Warrior Wrote:
(12-10-2013, 11:29 PM)pianist Wrote: heard from sj forum ""one singapore unit of one Malaysian broking house was said to have been hit so hard that its senior management had to fly in from Kuala Lumpur to discuss a potential capital injection. ""

That is a very big hint.....Tongue

Amfraser, CIMB, Kim Eng. There are 3 of them.
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(12-10-2013, 05:38 PM)dydx Wrote: After all that has happened in the last 2 weeks, are there still any good reasons to want to invest in Blumont Group, Asiasons Capital and LionGold Corp?

I guess most serious and value-oriented investors have better targets and things to do!

For those who have lost a bundle - including the controlling shareholders/directors of these 3 companies; their friends/supporters including those foreign funds/institutions which have taken up stakes in these 3 companies; and those remisiers/traders who have been trading and supporting these 3 counters on a daily basis, and others who got sucked in by the euphoria when the share prices were on the way up - for sure they have learned a bitter lesson on betting on stocks/investments which have gone terribly wrong. Those broking houses and financiers which have big indirect exposures as a result of their dealings with and/or financing the about parties, will likely have to suffer losses too. Indeed, in this 3 cases, Mr Market has little mercy for those involved.

We can't help ourselves. Most people's brains are wired for fast profits and speculating. Humans can be very illogical sometimes, we know something is not good for us, but we still ignore the potential obvious dangers and do it. Sad

A good example is smoking. We know it is unhealthy and expensive, but many people still do it around the world. Angel

Once a person is used to penny trading, it is difficult for him to change his style, because he will try to convince himself by saying, "This time, it will be different!"
My Dividend Investing Blog
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Didn't even realize got such hot stocks until they were designated. I guess such stocks would never appear in a value investor's stock screening...
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