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Risk in new mining stocks

Volatility in the share prices of mining companies at the exploration stages is common in Australia, where 40% of the listed stocks are mining companies that are still junior explorers.
According to experienced mining executive Barry Eldridge, this has been the case in many Australian- listed mining companies which was similar to the recent selldown in the share prices of three Singapore-listed companies.
“It is a sort of gamble on the prospects of huge reserves and feasible production.
“Chances are probably less than one in 10, but investors still buy in as the rewards are huge if the selected mining company is successful. The risk is certainly there,” he told StarBiz recently.
However, he said things would typically settle down after the euphoria was over with these mining companies as they moves along their development stage into production, whereby the companies could be valued based on their proven resources and reserves.
Eldridge is the chairman of the Diggers and Dealers, an i…

Criticism of regulators over Noble is misplaced

Frontline stockmarket regulator SGX (Singapore Exchange) and its supervisor MAS (Monetary Authority of Singapore) were criticised by research firm Iceberg Research last month for not acting over the past 30 months during which the shares of commodities firm Noble Group crashed by more than 90 per cent following publication of Iceberg's first attack on Noble's financials in early 2015.
The main point of contention is that Noble's alleged overly aggressive accounting should have been flagged earlier by SGX and MAS, with the implied suggestion that had this been done, the market's interests would have been better served
Could regulators have done more? Critics will say yes, but it certainly isn't clear that this is the case.
First, it has to be noted that SGX adopts an evidence-based regulatory approach, which means that it would intervene or take action only if the evidence warrants it.
As pointed out by Securities Investors Association of Singapore (SIAS) president…

Court rejects accused's bail bid, calls it 'fishing expedition'

The High Court has rejected a bid by the alleged mastermind of the 2013 penny stock crash to get documents and witness statements he claimed could support his bail application.
Justice See Kee Oon ruled that John Soh Chee Wen's request amounted to a "fishing expedition", and pointed to "a real risk that disclosure of witnesses' statements to the extent sought will prejudice a fair trial, as the applicant can find ways to tailor his evidence ahead of trial".
Soh believes that prosecutors unfairly picked out portions of recorded conversations and witness statements that were detrimental to him when they opposed his bail application in February.
He wanted the High Court to allow him access to all recordings of conversations between him and remisier Gabriel Gan, and all witness statements obtained from Mr Gan, trading representative Ken Tai and former LionGold executive Peter Chen that contradict the allegations made by prosecutors.
Soh was refused bailafter h…

Rowsley's third revival act in a decade should prompt caution

Who doesn't love a company that's on the cusp of getting another shot at reinvigorating itself, huh? Such fascination, albeit premature at this point, led traders to lap up Singapore-listed Rowsley's stock last week after the company unveiled a ground-shifting all-share S$1.9 billion deal to revive its fortunes and move into the largely lucrative healthcare space.
But lest one forgets, this follows five years after the firm, controlled by billionaire Peter Lim, took its chance on a S$580 million transformational plan to inject a huge plot of waterfront land in Malaysia's then-booming Iskandar and one of Singapore's oldest architect firms RSP into the company.
Then, the reverse takeover deal aimed at turning the firm into a real estate bigwig had also galvanised the stock but alas till today, it has yet to live up to its lofty expectations.
This wasn't its first makeover bid that had set off a buying frenzy of its shares. Back in 2007, Rowsley, then somewhat du…

A descent into the SGX abyss

You have wandered far from the gleaming towers of Singtel and DBS and the verdant hills of Bukit Sembawang. Nay, these places are not for your kind. The minimum lot size is too big and the share price is too high.
Staring glumly at a NetLink Trust manhole, studiously ignoring the Rowsley touts, you wonder: Is there anything more edgy?
And that's how you found yourself deep down by the dark waters of the Singapore Exchange (SGX) sewers.
The S-chip stench is the first smell that hits you, as you grope your way through a dim cavern oozing with corporate effluence. You gag slightly from the whiffs of corporate governance scandals past, missing cash, failing businesses, uncollectable receivables and disappearing executives in China's Fujian province.
Something almost makes you trip over. Brandishing your National Day Parade Funpack lightstick, you see a lump of coal with the word "Noble" etched on it. It looks like a cheap - albeit dirty - paperweight, maybe a potent wea…

SGX, MAS draw further fire over Noble saga

Market observers agree with Iceberg Research that regulators did not do enough to protect investors
Singapore stock market regulators are coming under pressure, with market observers on Friday joining Iceberg Research in saying that more could have been done to protect investors in the long-drawn Noble Group saga.
Their comments come as the Monetary Authority of Singapore (MAS) responded on Friday morning to Iceberg's criticism, saying that it will follow up with listed companies to investigate any allegations of irregularities.
Corporate governance advocate Mak Yuen Teen, an associate professor at the National University of Singapore, said Iceberg's criticism is not without merit.
He told The Business Times: "While I can understand the regulators being hesitant to do anything, especially when there is no clear wrongdoing - and bearing in mind that Noble has been receiving clean audit opinions - there is a sense among investors that the regulators are too passive and rea…

Soh saw weak case against him but believed he would be charged nonetheless, court told

He wants prosecution to furnish all information, documents he deems relevant to bail application
The man accused of masterminding the 2013 penny stock crash told a remisier before he was arrested in November 2016 that he did not think investigators had a strong case against him, but he believed they would still find a way to charge him and seek a prison sentence, it was revealed in arguments before the High Court on Wednesday.
Lawyers for John Soh Chee Wen want the court to compel prosecutors to provide documents, including all recordings of conversations between Soh and that remisier, that they say are relevant to their client's bail application.
The prosecution, however, argued that the application is tantamount to fishing for evidence.
Justice See Kee Oon said that he wanted time to consider the arguments made on Wednesday before giving his ruling, and has adjourned the case to Aug 8.
Soh is seeking all audio recordings of conversations between him and remisier Gabriel Gan; an…

Confessions of a market maker in Hong Kong’s penny stocks fiasco

The fiasco with Hong Kong’s penny stocks had been spreading like wildfire. How did it happen like this?
Let’s imagine I’m one of the professional traders whose magic flute has many penny stock investors astray, down the abyss to their personal misfortune.
But don’t blame me. I’m no different from the unsupervised child who finds the cookie jar open. I do what every kid does -- I gouge on cookies till I’m stuffed.
I work in a securities firm you see, but my boss is no ordinary broker. He’s a chong kar (莊家) – market maker. He “made” the stock price of the listed companies he controlled.
The trade craft is derived from ancient wisdom. First, make up some good news about a company. Then, the men on the right side of the room call in buy orders, while those on the left side sell them the stock, and vice versa.
The price goes up and up, until the mom-and-pop investors take notice and pile in. Next announce a massive rights issue to scare off the little shareholders, so shares can be picked…

Tracking the short-sellers

Short-sellers are now a regular fixture of the stock market, yet most investors still do not have enough information to get a handle on what they are doing.
But as prominent investor and writer Jim Rogers observed in his book Street Smart, short-sellers have a better record at getting their bets right compared with most traders because they can lose big time if they get it wrong.
So it would be useful for the rest of us to get a fairly accurate picture of how widespread their activity is in order to gauge the level of bearish sentiment surrounding a stock or the market in general, so that we can better make an informed decision on our investments.
Short-sellers borrow scrip in the securities lending market to sell in the hope of making a profit by buying it back cheaper later.
But while they may play a role in shining an unwelcome spotlight on under-performing firms, some of them get plenty of brickbats for the hardball tactics they use when they ambush a company after building a big…

Many Hong Kong penny investors caught in cross-holdings web

Two weeks ago, a sudden plunge in a string of penny stocks on the Hong Kong stock exchange wiped out US$6.1 billion in market value in two days and left some companies down 90 per cent.
Forty of those companies turned out to be part of a web of 50 firms linked by cross-holdings, overlapping directorships and questionable corporate transactions that former HKEX director-turned-independent investor and stock commentator David Webb had called out in a May report titled The Enigma Network: 50 stocks not to own.
Research from corporate intelligence portal Handshakes, an artificial intelligence platform run by Singapore startup DC Frontiers, now indicates that key individuals from the Enigma network are linked to a wider web of Hong Kong small caps.
Most of these companies share characteristics of the Enigma firms, such as overlapping directorships and similar histories of regulatory, enforcement or disciplinary reprimands from authorities, and could potentially trigger another rout, say a…

Here are three theories for explaining Hong Kong’s penny stock crash

Mainland Chinese investors were the biggest losers when dozens of Hong Kong’s penny stocks plunged, some losing as much as 90 per cent of their value, on June 27.
Three theories stand out to explain the crash.
First a little premble: 90 per cent of these penny stocks belong to an Enigma Network of 50 interconnected issues, mapped out in May by gadfly investor David Webb.
A professional trader, let’s call him Fun Gor, controls the network. He’s been having financial troubles, ever since trading in Lerado Financial Group Co. was suspended on June 6 pending a regulatory investigation.
The first and the most colourful theory says the crash was an ambush by enemies, of which Fun Gor has no shortage. There are the TV starlets who lost their shirts on his investment tips, his fellow traders whose sweethearts had made the wrong punt, and regulatory officials who were forced into a corner to conduct an industry-wide crackdown because of his recklessness. Even Webb himself had his 2.3 per cent…

China group buys into True Group; IPO on cards

Hong Kong-listed Tongfang Kontafarma has acquired a sizeable stake in Singapore-based fitness and wellness provider True Group for US$36.7 million in cash, a move that paves the way for the latter to significantly expand its presence across China.
The deal, announced on Tuesday afternoon, will see Tongfang Kontafarma - a Chinese company indirectly invested by Tsinghua University that primarily manufactures and sells prescription drugs - take a 51 per cent stake in True's Singapore and China businesses, as well as a 29 per cent stake in its Taiwan operations.
As part of its longer-term growth strategy, True also intends to pursue an initial public offering (IPO) on the Hong Kong Stock Exchange within the next two years or so.
True currently owns and operates 26 fitness and yoga centres in Singapore, China and Taiwan, with an annual turnover in excess of US$100 million.
The company's founder and group chief executive officer Patrick Wee said the new partnership with Tongfang Ko…

Ex-Nomura trader tells jury how bosses taught him to lie to clients

When Caleb Chao started working on Nomura Holdings Inc's mortgage-bond desk after graduating from college, he got an education very different from the one offered at Cornell University.
Testifying at the trial of three former Nomura traders, Mr Chao said on Monday he was soon taught how to mislead customers about prices and other details in order to get larger commissions.
"The purpose was to sort of make a client feel like we were working for them, but in reality we were making more money," Mr Chao told jurors in federal court in Hartford, Connecticut. "I just graduated from college and I had no other prior experience. I was relying on how my bosses told me how the market operated."
Mr Chao, who worked for Nomura from 2010 to 2014, is the second former trader at the Japanese firm to take the stand for prosecutors in the trial of three ex-colleagues accused of lying to their clients.
Ross Shapiro, Michael Gramins and Tyler Peters deny wrongdoing, saying their …