Every now and then, we get a couple of SG stocks being queried by the Singapore Exchange for unusual trading activities. Many of such stocks are often unheard of and in most cases have unusually low trading volume. However, here are 3 stocks of late that I would actually consider to be quite “mainstream”.
Let’s see what they are and what netizens think are the causes behind their “unusual trading activities”.
What is a Query and why does SGX conduct one?
Queries from SGX usually come in 2 forms and that’s a Query regarding trading activity and/or a query regarding financial statements.
In both cases, they usually happen when the exchange finds irregularities in the companies be it in the trading of the stock or inconsistencies in the documents which said companies submit to SGX.
In most cases, such queries don’t always mean that the said companies are in trouble but the nature of such queries are often to protect investors and to ensure that all trades are “fair, orderly and transparent.”.
For queries regarding trading activity, they usually come in the form of a 1-2 page document where the 3 standard questions being asked by SGX include,
- Are you (the issuer) aware of any information not previously announced concerning you, your subsidiaries or associated companies which, if known, might explain the trading?
- Are you aware of any other possible explanation for the trading? Such information may include public information by rumours or reports.
- Can you confirm your compliance with the listing rules and, in particular, Mainboard Rule 703?
In all my years of observing such events, I daresay that majority of the responses to the above are the same. No further comments there *raises eyebrows*.
Now that we know why SGX queries companies, let’s go on to explore the 3 companies in question.
1) Yoma Strategic Holdings (SGX:Z59)
Date & Time of Yoma’s SGX Query: 06-Apr-2022 15:18:19
Most of here would be familiar with the narrative behind Yoma Strategic Holdings where the stock plunged due to the events in Myanmar. Many investors got burnt (myself included) as the prospect of Yoma as a conglomerate did seem ideal at that point in time (F&B + Payment Systems + Property etc.).
For those unfamiliar, an extended trading halt was slammed on the stock and the moment it lifted, the stock had already sunk by about 20-25%. It was indeed a painful moment as many investors were not able to react to the swing until after it happened.
After almost a year of consolidation at the $0.14 level, we are now seeing an unusually high degree of trading happening here. Based on my own opinion, I daresay that this may be somewhat of a mini SGX short squeeze happening on our own home turf.
Here are some numbers to take into consideration,
- Volume for Trading Week starting 21 March: 4.58m
- Volume for Trading Week starting 28 March: 23.94m
- Volume for Trading Week starting 4 April: 190m
There appears to be no mainstream reason for this to happen however some reasons which netizens have discussed include:
2) Sembcorp Industries Ltd (SGX:U96)
Date & Time of Sembcorp Industries’ SGX query: 07-Apr-2022 15:35:09
With Semborp Industries, I believe that the query is more in relation to the extraordinary bull run of the stock more than its trading volume. As we know, the war with Ukraine is indeed driving prices up and key beneficiaries include companies that deal with oil/petroleum.
Reference to the chart above, the price action has broken past its previous all-time high in 2015 and is in fact trading at its all-time high even at the time of writing. Personally, I find the reasons behind this bull run to be less speculative in nature given how the nature of this company’s business would be relatively “un-touched” in an inflationary environment. Furthermore, the price action has been observant of a consistent linear support level which has given investors more than enough opportunities to buy the dip.
Unlike Yoma, I am unable to find any major news or even discussions relating to this company. At best, there is talk of an overseas tender which they might win but even so, I doubt that’s enough to sustain such an extensive rally. As such, one logical conclusion is that we have plenty of BBs in this company simply refusing to sell.
3) EC World REIT (SGX:BWCU)
Date & Time of EC World’s SGX Query : 07-Apr-2022 17:16:48
Units of EC World REIT saw massive sell-offs on Friday (Apr 8), with its unit price closing at S$0.655, down S$0.08 or 10.9 per cent, over uncertainties on its ability to refinance its loans.
The Business Times 08/04
Here we have one query that made it into mainstream headlines. As the story is still unfolding, the main issue here (in simple terms) is that there appears to be some degree of doubt involved in EC World’s ability to meet some of its debts.
If we look at this in greater detail, it appears that the source of the uncertainty is to do with the financial statements that the REIT submitted to SGX earlier on in the week.
Manager said the uncertainty arose because the refinancing of loans, due for repayment in May and July 2022, were not completed at the time of the issuance of the financial statements.
The Business Times 08/04
In response to the query, EC World REIT has emphasized that they expect the refinancing exercise to be a success and that all is business as usual. They went on to state that it was “not necessary to suspend the trading” of the REIT at present.
Are such queries bullish or bearish?
Once again, queries conducted by SGX are meant to alert market participants of irregularities in the market. It is somewhat like a spotlight being cast on said companies. Such an act is not meant to imply that the stocks’ price would continue to rally however I believe that such queries may indeed be a subtle note of caution to investors that some form of speculation may be at play. As such, market participants who have vested interest in the companies in question may want to watch their investments a little more closely in time to come.