Noble shares leap 28% in second day of gains

Noble Group shares powered to their largest surge in more than 15 years yesterday, as the commodity giant looks to a more stable footing after taking a severe beating in recent months.

The counter jumped 13 cents or 28 per cent to close at 60 cents, its biggest rise since December 1999 - and its second day of gains.

Noble was the bourse's most active stock, with more than 263 million shares changing hands.

With yesterday's showing, it has mostly erased losses last week when it shed up to 28 per cent owing partly to rampant short-selling. On July 31, short interest hit 9.7 per cent of outstanding shares, Markit data shows.

Noble shares were lifted by a short squeeze yesterday as short sellers rushed to cover their positions after the company flagged "satisfactory" upcoming results, IG analyst Bernard Aw said.

"The likelihood of Noble reporting a positive set of results is definitely helping the company stem the fall for at least this week, so we may still see recovery in the coming days," he said.

Noble announced on Monday that its second-quarter performance - to be unveiled on Aug 10 - was satisfactory with positive earnings, adding that it still has US$15 billion (S$20.6 billion) in bank lines.

It said it has been approached by several parties with interest in financing or investing in Noble. Some market watchers read this as a hint that a white knight might be in the wings with plans to take over the beleaguered company.

Remisier Desmond Leong said: "That rumour is part of why we had a short squeeze. But I'm not convinced that the worst days are over for Noble. No agreement has been solidified yet, and a deal will be hard to structure for a massive firm like Noble. My advice to my clients is not to touch Noble yet... Don't forget that its shares have been on a downtrend since 2011 - it'll take a lot more than a two-day recovery or a quarter of good results to convince me."

Agreeing, Mr Aw said: "A lot still rides on what Noble says on Aug 10. If it can't fully address the concerns around its financials and governance, market confidence will quickly dissipate."

Noble will provide additional disclosure on the valuation of Yancoal on Aug 10. This is one of the areas Iceberg Research focused on in its criticisms of the company.

Noble will also reveal the findings of PwC's review of its mark-to-market business model.

Meanwhile, Noble has a US$735 million bond redemption due yesterday. The company said it has the ability to fund the redemption.

A version of this article appeared in the print edition of The Straits Times on August 05, 2015, with the headline 'Noble shares leap 28% in second day of gains'. Print Edition | Subscribe