Investors, traders and fund managers have been scratching their heads over the past week over MyEG's share price. Just have a look:
“The company wishes to inform that to the best of its knowledge after making due enquiry with the board of directors and major shareholders of the company seeking the cause of the unusual market activity in the company’s securities, the company is not aware of any factor which may have contributed to the unusual market activity, which led to the sharp fall in share price and increase in volume recently,” it said.
Read more at https://www.thestar.com.my/business/business-news/2018/12/12/my-eg-falls-in-heavy-trade/#5V4hMkcGk4IJr6JL.99
Generally i wouldn't bat an eyelid over stock volatility, especially in the present trying market conditions. What was galling was that the official statement from the company itself that they did not know why the stock price got hammered over the past few days.
Let's look at the developments over the past few days:
a) There was an immense volume jump on 30 November to 338.8m shares with the majority of the shares "crossed in the market" at RM1.11 during the "price fixing slot (4.45-4.50pm)". Crossing in the market hints of legitimacy and also can shroud the real seller and buyer if they did it via numerous accounts. As no substantial shareholder informed Bursa that they had bought/sold substantially a few days after that transaction, suffice to say, they came from various sources of buyers and sellers - but it would be clear to any market observer that tens of accounts cannot be acting in concert without "someone in control of the situation".
338.8m shares a day is almost 10% of its number of shares outstanding. That amount of shares being traded, with the bulk at 4.50pm all in one go. Hard t fathom that it was all minority shareholders deciding to sell and buy all at once.
b) The stock traded up 11 sen on 81.8m shares the next day but subsequently has been falling like a rock continuously till the big drop today: down 17 sen to close at the day's low of 84 sen on 231.8m shares traded.
c) The government announced on 7 December that it is reviewing temporary foreign worker permit renewals, which affected MyEG's business outlook for sure if they were to lose the business.
Hence one of the first question will be: "did the sellers knew of this news on 30 November?"
It would be too simplistic to think the sellers knew something that they buyer doesn't. In many collusion cases, both sellers and buyers KNOW about the impending market moving news. Sometimes the "sellers" are more important, and need to sell first without people knowing. The buyers then sell again in the market later. I am just guessing here. Or it may be NOBODY knows anything and it was a straight forward market transaction. Anyhow, Bursa and SC should investigate so as to provide all investors with a clear picture that nothing untoward actually happened. It is important for market integrity.
d) Even more interesting was that on 27 November, the company announced potential e-govt projects in Indonesia. This can be surmised as positive news as it might be able to transplant similar business model and business knowledge in a less "politically motivated" environment.
e) If the 7 December news was "so bad", the selldown would have happened immediately, but no, it did not.
f) So was it a margin shortfall situation like Seacera. Possible but we don't know. Judging by the flow of events, a margin sell down by a substantial shareholder could be probable, and if that's the case the company should not say they don't know what happened.
g) The company and TS Wong have been busy buying shares for the past few weeks. I am going to leave the facts there. EPF announced on 12 December that it is now a new substantial shareholder with in that they have acquired 29.5m shares. Doesn't look too good for EPF to have bought and see the stock crater the next day.
Conclusion: I am not saying there were any shenanigans over the last 2 weeks but for the company to say they were unaware is a bit hard to stomach.
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