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Yangzijiang's stock tumult: a primer for firms to respond swiftly, not recoil

TIMING is everything in the stock market - or so, it goes.

Based on Singapore-listed Yangzijiang Shipbuilding's two encounters with stock turbulence - last month and five years ago - and how it took charge of the situations rather differently, we can also surmise these - bad news travels fast, good news comes early and delayed reaction can cost you.
When Yangzijiang's shares tumbled over 10 per cent in mid-2014 after which trading was halted amid allegations of misdeeds by a Shenzhen-listed railway firm against the shipbuilder's founder, controlling owner and executive chairman Ren Yuanlin, a clarification was shot out within two days.
The China-listed firm's incumbent board had alleged the misdeeds as it was resisting Mr Ren's attempt to reconstruct the board after he emerged as largest shareholder. Mr Ren quashed the charges and in fact, had earlier confidentially submitted his rebuttals to the Shenzhen Stock Exchange - said Yangzijiang in response to a trading acti…

SGX RegCo requires exit offers to be fair and reasonable, shareholder vote to exclude offeror and concert parties

THE regulatory arm of the Singapore Exchange (SGX RegCo) has announced changes to two aspects of the voluntary delisting rules for listed firms, with immediate effect.
The changes come after consultations with market participants and the public last year. Small investors in companies such as Aztech and Vard had previously complained that the existing rules allow issuers to get away with low-ball exit offers.
The first change requires voluntary delisting offers to be both “reasonable” and “fair”, in the opinion of the appointed independent financial adviser (IFA).
Until Thursday, an exit offer was only required to be reasonable but not fair. This amounts to “doublespeak”, minority investors have argued before.
The new change effectively pushes companies to give shareholders a better exit value if they choose to go private by way of a voluntary delisting.
To address other concerns relating to the independence of IFAs and IFA opinions, the SGX said it will also work with relevant industry …

S-Chips may yet rise from their slumber

Liquidity is a valued virtue for investors. In 2008, I was enamoured of a company that was liquid in every sense.
China Milk, a Singapore-listed Chinese company (known as an S-Chip), was the principal producer of pedigree bull semen and cow embryos.
China's appetite for protein meant that milk consumption was surging. The volume of milk consumed there was just one-20th that of the United States', but China's GDP per capita was a 10th that of the US'.
Based in the fertile north-western province of Heilongjiang, China Milk had a vice-like grip on the source of China's milk boom: It had the rare licence to sell pedigree bull semen.
The productivity of Canadian cows is four times that of Chinese cows. By importing pedigree bull semen from Canada's prized Holsteins, China Milk aimed to turbocharge the country's milk productivity.
With the company well-entrenched through a network of distributors, its sales tripled from FY15 to FY18.
China Milk was a cash cow. Its oper…

Allied's missing S$33m and questions about the escrow account

ALLIED Technologies' revelation that about S$33 million of cash held in escrow with law firm JLC Advisors had gone missing raises questions about why that account existed for so long, and how the account held as much as it did.
The genesis of the account dates back to Oct 23, 2017, when Allied Tech reached an escrow agreement with the boutique law firm. The escrow account was set up while Allied Tech was carrying out a stock placement to raise funds for unspecified acquisitions.
When the placement was completed on Oct 31, 2017, the company deposited the S$33.4 million of net proceeds into the escrow account.
That S$33.4 million figure shows up in a few places. Earlier this month, Allied Tech's auditor, Ernst & Young, raised concerns about S$33.4 million held in escrow. This week, JLC said the S$33.4 million is believed to have been disbursed under the instruction of its managing partner Jeffrey Ong, who is now uncontactable. Allied Tech says it has not received the funds, and…

JLC lawyer told repeatedly to return S$33m before going incommunicado

FOR two months before going incommunicado, Jeffrey Ong Su Aun - the senior lawyer in the middle of the case of S$33 million of missing funds - fended off requests from his client Allied Technologies to return the money.
Mr Ong is the managing partner of JLC Advisors, the law firm managing the escrow account which held the funds.
In an SGX statement on Thursday, Allied Tech cited a letter purportedly from JLC to the listed precision engineering company that placed the 42-year-old Mr Ong at the centre of questions surrounding the missing cash. It confirmed a report by The Business Times on Thursday that S$33 million of clients' money had gone missing at JLC, with the funds belonging to Allied Tech.
BT has not been successful in reaching Mr Ong since Wednesday via his mobile number and email address.
Allied Tech said in the SGX announcement that it had sought repayment of the money from JLC at various times since March 23, 2019, including a May 17 letter of demand from Allied Tech's …

Cash-flush buyers taking billions off Singapore bourse via privatisations

Privatisation has picked up pace this year, and is likely to continue, as acquirers - strategic investors, private equity firms and entrepreneurs - continue to target listed corporates.
There have been about a dozen ongoing and completed takeout offers this year, mostly concentrated in the unloved small- to mid-cap space that is struggling with industry disruption, diminishing free float, and poor trading interest.
Their aggregate market cap adds up to close to S$5 billion - albeit still a stretch to beat 2018's figure, which included Global Logistic Properties' record S$16 billion privatisation deal.
Atin Kukreja, CEO of financial advisory firm Rippledot, cites low valuations, poor trading liquidity, strong corporate balance sheets, and cheap funding as the prime drivers behind the trend.
"Liquidity and trading volume in the equity market is low, but they are high in the debt market. With the interest rate environment still benign, acquirers are able to find opportunities to…

SembMarine says recovery for firm could come later this year or 2020

Sembcorp Marine chairman Mohd Hassan Marican at Tuesday's annual general meeting flagged that the company may be approaching the bottom of "a very long downcycle", and recovery could come as soon as later this year or in 2020.
He also stressed that the group has shifted from fabrication and pure construction work to gradually becoming a marine engineering solutions provider, with a bias towards gas solutions.
It is now doing higher-value work such as developing engineering solutions for more demanding environments, and this will be supported by its new facilities at Tuas Boulevard Yard, which has the infrastructure to allow the group faster turnaround of vessels, and larger dry docks that can do more complex jobs. "What we couldn't do before, we can now do in Tuas," he said.
The group is currently head-quartered at Tanjong Kling. Asked by shareholders about the group's slim S$3 million gross profit and S$74 million net losses incurred in FY18, Mr Marican e…

Witness admits to ‘front running’ practices in Singapore penny stock crash trial

The first witness of the trial over 2013 penny stock crash which mopped out S$8 billion (RM24 billion) from the Singapore share market today admitted that he had practiced “front running” while placing share orders.
It is understood that “front running” is a prohibited practice of entering into an equity trade to capitalise on advance knowledge of a large pending transaction that will influence the price of the underlying security.
Ng Kit Kiat, a remisier with Oversea-Chinese Banking Corporation Securities Pte Ltd (OSPL) since 2000, admitted doing it using his wife account after receiving trading instructions from Quah Su-Ling, one of the accused person.
The admission was made by Ng while he was cross-examined by Quah’s counsel Philip Fong Yeng Fatt of Eversheds Harry Elias LLP on the fourth day of the trial before High Court Judge Hoo Sheau Peng.
Fong highlighted two occasions in 2013 in which Ng had placed orders ahead of orders for similar stocks instructed by Quah and another accused …

Quah Su-Ling's lawyer accuses prosecution witness of 'inventing evidence', front-running

The drama continues in Day Four of the trial of John Soh Chee Wen and Quah Su-Ling as Quah’s defence counsel accused the prosecution’s first witness of “inventing evidence” and engaging in the practice of front-running.
Continuing in his cross-examination of OCBC Securities remisier Ng Kit Kiat, Quah’s lawyer Philip Fong in court on Friday homed in on the daily trade reports Ng sent via SMS to Soh and Quah.
Fong put forward that trade summaries are meant to provide an accurate picture of the trades that were executed. But pointing out certain errors in some of these SMSes, he argued that Ng’s reports were “inaccurate”.
Ng conceded that some of these mistakes could have been due to “typo error”. “My clients are very, very smart people,” Ng replied. “They would know these are typo mistake.”
Fong also pointed out that these daily SMS reports were “incomplete” and did not include all the information of trades carried out. For instance, Fong said, information of sell trades executed had been l…

Remisier concedes front-running before executing trading instructions from defendant

An OCBC Securities remisier said during the ongoing penny stocks trial that market intelligence shared between brokers and clients, who then acted on the information, could push up share prices.
The prosecution witness also conceded under cross-examination on Friday that he had front-run instructions from one of the accused, Quah Su-Ling, 54.
Remisier Ng Kit Kiat has earlier told the court that he took instructions from Quah and her co-accused John Soh Chee Wen on trades of Blumont Group, Asiasons Capital (now Attilan Group) and LionGold Corp, collectively known as BAL from August 2012 to Oct 3, 2013.
Quah and 59-year-old Soh are said to have controlled a web of 189 accounts to manipulate the market for the BAL counters, and used intermediaries and brokers like Mr Ng to operate the scheme.
On Friday, the fourth day of the joint trial of the two accused, Quah's lawyer, Philip Fong, placed a spotlight on the flow of information in the market. Under questioning, Mr Ng agreed with Mr Fong…

Investigating officer coached witness on statement, says defendant's lawyer

THE lawyer for John Soh Chee Wen, the alleged mastermind in the ongoing penny stocks trial, on Thursday argued that the prosecution's first witness was coached by the investigating officer (IO).
Senior Counsel N Sreenivasan, in his cross-examination of OCBC Securities remisier Ng Kit Kiat, queried the witness about his statement, in which he fingered 59-year-old Soh and co-defendant Quah Su-Ling as the ones placing unauthorised trades for accounts that belonged to a few other individuals, including Quah's mother.
Quah, 54, is former chief executive of Ipco International (now renamed Renaissance United).
Mr Ng said in the statement that it is likely that calls to his mobile phone from August 2012 to October 2013 contained trade instructions from the duo for the nominees' accounts.
Mr Sreenivasan focused on the word "nominees", and got Mr Ng to confirm that the word was used by the IO and not the witness.
Mr Ng initially said he did not think using the word "nomine…

Soh, Quah performed unauthorised trades in nominee accounts: OCBC Securities remisier

OCBC Securities remisier Ng Kit Kiat testified on Wednesday that he took unauthorised trade orders from John Soh Chee Wen and Quah Su-Ling, who are now standing trial in the High Court over alleged manipulation of three penny stocks Blumont Group, Asiasons Capital and LionGold Corp, collectively known as BAL.
Both Malaysians, Soh and Quah are accused of orchestrating a manipulation scheme from August 2012 to October 2013, by placinghundreds of thousands of trades through an extensive web of 189 trading accounts in the names of 60 individuals (including Quah herself) and corporations related in one way or another to the duo, co-accused Goh Hin Calm or the three companies involved in the case but controlled by Soh and Quah.
Mr Ng, the first prosecution witness to take the stand, took the court through how he became the broker of former Ipco Internationalchief executive Quah. After that, she referred her mother, her subordinate Goh and LionGold's then-independent director Ng Su Ling to…

Penny scandal: Trial of alleged masterminds begins

SINGAPORE prosecutors opened the trial for Malaysian businessman John Soh Chee Wen and former Ipco International chief executive Quah Su-Ling on Monday, accusing the pair of masterminding a massive stock manipulation scheme that collapsed in the penny stock crash of October 2013.
Describing the case as the "most serious case of stock market manipulation in Singapore", the prosecution told the Court that Soh and Quah drove up the share prices of Blumont Group, Asiasons Capital and LionGold Corp – known collectively as BAL – in the year leading up to the crash. They did so by "wash trading" shares of the three stocks within a secret web of 189 trading accounts held in the names of 60 individuals and companies, the prosecution said. Asiasons is now known as Attilan Group.
Those controlled accounts were behind 60 per cent of Blumont trades; 88 per cent of the trades in Asiasons shares; and 90 per cent of LionGold trades during the periods investigated, the prosecution sa…