Things Are-A-Changing At Bursa/SC
Finally, A Query That Brings Consequences
It used to be whenever KLSE or Sc queries a company's erratic share price movements, nothing would ever happen. The company will usually come back with the usual reply "not aware of any reasons why there is abnormal activity in their share price".. or something to that effect, and continue on its merry ways. After flogging Iris the horse till it caved, investors are now more sensitive to any queries or reprimands by the SC pr Bursa. Good thing!
Mobif Bhd, in reply to a Bursa Malaysia query yesterday, said it was not aware of any rumour or report on its business or affairs that could have contributed to the unusual market activity on its securities. In an update to its Aug 3 announcement, Mobif said subsidiary Mobif Wireless Broadband Sdn Bhd targeted to launch trial runs for its wireless broadband technology, iBurst Solution, in Kuala Lumpur next Tuesday. .... Ta-dah... Mobif share price fell nearly 30% this morning on huge volume and although regained some ground, still lost 20% in value.
Will this spell the end of speculation?
Answer: No. I don't believe the SC or the Bursa would want to kill it. What they do not want to see is excessive speculation or activity that mirrors cornering of a stock. Syndicates would just have to be more careful when doing financial engineering. Try not to go 5 days of straight gains, do the cha-cha .. three steps forward two small steps back ... and do not go more than 10% a day, it arouses suspicion already.
What are Bursa/SC motives and objectives?
Answer: Not to be regarded as a very cowboy market anymore. To kill off speculation especially pertaining to MESDAQ counters. If you are Second Board or Main Board, I think they will give you more leeway. If you are MESDAQ, I'd be very careful as Zarinah has the cane in her hand and she is willing to use it ... very swiftly. Which is also why the SC has been especially stringent in rejecting new IPO applications, in particular those for Mesdaq counters... heck, even Main Board and Second Board companies are finding it hard with issues such as usage of funds from rights issues - but the SC is right again here, the minority shareholders has to be protected and the integrity of corporate governance has to be maintained. Fining directors is another very good move, now old foggies cannot just show up and collect biscuit money.
1 comment:
hi dali,
this was from the edgedaily.com/REUTERS just last week..
09-08-2006: Bursa in Catch-22 situation, says chief regulatory officer
By Hsu Chuang Khoo
Bursa Malaysia has a dilemma - as a listed company, it needs to make money, but as a market regulator, it needs to stamp on one of its biggest sources of income -- frenetic trading in small, obscure stocks.
"It's a Catch-22 situation," Devanesan Evanson, Bursa's chief regulatory officer, told Reuters in an interview this week.
"We intervene very reluctantly. Some speculation is okay, but not when you whack it out of shape."
Malaysia has a reputation of being a speculator's playground: its army of volatile small caps provide the only real action in a market dominated by dozy, state-controlled blue chips.
It wants more investors but progress has been slow, with foreign investors critical of the government's reluctance to sell down core bank holdings.
And some of the market's biggest movers and shakers aren't of the suit-and-tie variety. Instead, they sit at home or in small, smoke-filled corner offices, surrounded by banks of terminals, bodyguards and large dogs, their block trades often accounting for as much as a third or more of daily volumes.
Ironically, these so-called investment syndicates are a lifeline for small companies who are either too busy, too poor or not savvy enough for self-promotion.
"Sometimes these excessively speculated companies occupy the top volume charts. It makes us look ridiculous, makes the whole country look ridiculous," said Devanesan.
"But there are so many companies out there who trade below net tangible assets, or have price-earnings ratios in the single digits, that sometimes we tend to give them the benefit of doubt," he said, speaking in Bursa's office in Kuala Lumpur.
With foreign investors avoiding Malaysia because of the lack of liquidity in its heavyweight stocks, obscure retail counters, ranging from chicken farmers to high-tech start-ups, take centre stage. They can move wildly for no apparent reason.
Electronic passport maker Iris Corp is this year's star among retail investors. Its price rocketed more than 13-fold between November and May, when the exchange finally took the punch bowl away and briefly slapped trading curbs on the stock.
Shares of Iris, which has a market capitalisation of just US$148 million (RM542 million), have since come off the boil, but it remains one of the few stocks with decent liquidity.
In the first hour of trade on Aug 9, about 20 million Iris shares worth about RM10 million changed hands, compared with just 4,100 shares worth RM44,000 for the nation's biggest stock and bank, Malayan Banking Bhd (Maybank). The bank's market cap is about 75 times Iris's.
Bursa, which itself is about 40% held by the government, says it is doing what it can to improve its credibility.
It has co-developed a new set of indices with index-compiler FTSE, giving more weight to companies with larger free floats, and called for Malaysia's state-linked blue chips to sell more of their businesses into public hands to help boost liquidity.
It has also put more emphasis on disclosure and transparency, with a research collaboration with Standard and Poor's aimed squarely at boosting coverage of its lesser-known companies.
"It's tough," Devanesan adds.
"We don't want people to think they can come in to Bursa and just move the price up and down. But at the same time you can't tell people to go and sell more shares. They'll say I'm awaiting for the right value."
The government wants a higher price before it sells down equity, but higher prices have proven to be elusive -- partly because of the state's suffocating grip on the market.
Shares of Malaysia's three biggest firms -- Maybank, phone company Telekom Malaysia Bhd and power utility Tenaga Nasional Bhd -- have all fallen this year.
Malaysia's benchmark Kuala Lumpur Composite Index is Asia's worst performer over the past year and the only market in the region to have lost ground with a drop of about 2%.
Bursa Malaysia's own shares have climbed about 60% in the past 12 months, underperforming a 66% gain for the Singapore Exchange and a more than doubling for Hong Kong Exchanges and Clearing.
Bursa Malaysia has a market capitalisation of about US$854 million, one third of the Singapore Exchange's. It's now trading at about 32 times forcast earnings, making it the most expensive bourse in Asia after the Osaka Securities Exchange
Volume on Bursa totalled about US$5.7 billion in July, less than half of the roughly US$12 billion in neighbouring Singapore. - Reuters
why dont they just send the SWAT team to that house in damansara heights with the big dogs and just end the misery?
they're looking stupid and mighty ridiculous now again with mobif...
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