Companies flagged by SGX for scrutiny

At least four broking firms were raided by the Monetary Authority of Singapore and the Commercial Affairs Department this week amid speculation that the hammer is being brought down on market manipulators. The Straits Times looks at some of the counters that the Singapore Exchange has flagged for regulatory scrutiny in recent months.

The SGX Centre located at 4 Shenton Way.
The SGX Centre located at 4 Shenton Way. ST PHOTO: DESMOND WEE

Over the last nine months, the Singapore Exchange (SGX) has been raising red flags over counters displaying suspicious trading. They include stocks that the SGX found were traded by just a few people. Here are some examples of companies in the spotlight.

Koyo International

This firm's surprisingly resilient share price, just when the rest of the market was tanking, drew SGX's attention.

Shares of Koyo, an engineering service provider, stood firm between 38 cents on Oct 26 last year and 39.5 cents on Jan 14 this year, defying the bearish mood over that period when the Straits Times Index plunged around 14 per cent.

On Jan 15, SGX issued a "trade with caution" warning on Koyo that sent the shares diving 86 per cent.

"SGX's review of the trades in Koyo showed that a small group of individuals was responsible for 60 per cent of the trading volume of Koyo shares during this period, of which at least half of these trades were due to this group of individuals buying and selling among themselves," the bourse said.

"SGX is working with the relevant regulatory agencies on the matter," it added.

International Healthway Corporation

On Sept 9 last year, IHC was hit with a "trade with caution" warning from the SGX, after the healthcare service provider also put in an unusually resilient market showing.

Between April and September, IHC shares were traded in a tight range between 29 cents and 32 cents despite the volatile market. The bourse moved to review the trades and discovered some potential irregularities.

"A handful of individuals, who seem to be connected to each other, were trading IHC shares through various trading accounts among themselves," SGX said in its warning.

"In total, their trades constituted more than 60 per cent of the total traded volume of IHC shares in April 2015 to (September). SGX is working with the relevant regulatory agencies on the matter."

A panic sell-off followed, with IHC shares dropping 72 per cent.

CEFC International

Energy product trader CEFC was grilled twice by SGX between July 10 and Aug 6 last year, when the counter jumped more than tenfold to 36.5 cents from 3.4 cents.

A potential joint venture and its related funding could have been driving the trading activity, CEFC responded. But after CEFC announced a placement of 705 million shares at 35 cents each on Aug 10, SGX became suspicious.

A review of July-August trades showed that "buying volume was concentrated in a small number of offshore accounts".

"Together, these accounts accounted for more than 40 per cent of the total traded volume during the period," SGX said. "SGX is reviewing CEFC's (placement) announcement and the trades in its shares, and will work with the relevant regulatory agencies to pursue actions to maintain a fair, orderly and transparent market."

Zhongmin Baihui Retail Group

China-based department store operator Zhongmin Baihui came under scrutiny in February when SGX revealed that a small group of apparently connected individuals was responsible for more than 90 per cent of the shares' on-market buying volume.

This followed a period between Oct 26 and Feb 4 when Zhongmin Baihui's share price defied bearish market sentiment and remained steady. The SGX announcement triggered a 29 per cent price crash.

Terratech Group

Engineering firm Terratech received a "trade with caution" warning from SGX on Dec 7, after its shares jumped 120 per cent in a single day of trading.

Terratech said it was not aware of any reason that could have driven up the share price.

However, the bourse was not deterred, stating in its warning that it would look into all possible transgressions and work with regulatory agencies to ensure an orderly market.

A version of this article appeared in the print edition of The Straits Times on April 23, 2016, with the headline 'Companies flagged by SGX for scrutiny'. Subscribe