The latest on the Noble Group, Muddy Waters saga: What analysts say

SINGAPORE - Singapore-listed Noble Group on Friday rejected claims made by US short seller Muddy Waters whose negative report on the commodity player followed similar negative reports by Iceberg Research over the trader's alleged accounting malpractices.

Noble rejected the shortseller's claims about the firm's accounting practices and debt levels as "inaccurate, unreliable and misleading".

Analysts noted the shortseller seems to have rehashed most of the allegations by anonymous group Iceberg Research; and the fact that Muddy Waters had included a behavioural analysis report, ostensibly to show that Noble's management cannot be trusted, raises questions over whether it has hard evidence to support its claims.

Here are some of the comments:

"If these short-sellers can find a discrepancy in the disclosures, they will take an advantage of the situation. SGX and MAS have already put in place various mechanisms for the control of short selling of shares in Singapore. It is the responsibility of the company to firstly, be more transparent in their disclosures. Secondly, they need to be transparent and reassure investors to restore confidence. Investors also must not rush to react blindly but wait for the company"s response. Companies can always call for a suspension of trading but it must be done sparingly; but they cannot keep it suspended indefinitely as well."

President and chief executive of the Securities Investors Association David Gerald.

"This is the first time I've seen a shortselling report issued together with a behavioural analysis report. But the market won't take that too seriously. Investors can make their own judgments based on the company's financials and fundamentals. Noble's share price reaction yesterday shows the market is getting used to these types of shortselling reports, and won't get too panicked."

Maybank Kim Eng investment analyst, Wei Bin.

"With Muddy Waters declaring an open short position on the stock, they may have been buyers in the market on Thursday, progressively covering their shorts. More than 130 million shares in Noble were traded on Thursday. As we have maintained in our previous reports on Noble, the biggest risk for their business remains with the perception that key counterparties may have. This group could include bankers and trade creditors, with any unfavourable change in credit lines or terms of trade being a larger risk than the negative moves in share price."

CMC Markets analyst Nicholas Teo.

gleong@sph.com.sg