Phillip Securities restricts online trading of Noble Group shares as short-selling surges

Noble Group chief executive officer Yusuf Alireza.
Noble Group chief executive officer Yusuf Alireza. PHOTO: BLOOMBERG

SINGAPORE (BLOOMBERG) - Phillip Securities restricted online trading of Noble Group shares, the worst-performer on the Singapore benchmark Straits Times Index this year, as volatility in the stock increased.

Noble's shares have slumped more than 60 per cent since February when its accounting methods first came under attack by a group called Iceberg Research. Since then, profit has been hurt by the slide in global commodity markets, the company's credit outlook has been cut to negative and its bonds are trading below prices typical of an investment grade issuer.

"Clients can still trade Noble shares but not automatically online," Loh Hoon Sun, managing director of Phillip Securities, said in a phone interview. "They can place orders by calling our dealers, who will look at each client's background to make sure they don't over trade on this speculative stock."

The restriction comes as short-selling interest on Noble shares surged to a new high on Monday even as Chief Executive Officer Yusuf Alireza defended the finances of Asia's biggest commodity trader to investors.

Short interest as a percentage of Noble's outstanding shares climbed to 14.15 per cent on Monday, based on the latest available data from Markit Group Ltd. tracked by Bloomberg. MR Alireza led Noble executives in a five-hour investor meeting in Singapore the same day.

"The collapse in the Noble shares and spiking credit default swaps are getting investors really nervous," Nicholas Teo, a strategist at CMC Markets in Singapore, said by phone. "This could trigger more margin calls. That's spurring short sellers to intensify their attack."

The stock rose 9.6 per cent to 45.5 as of 9:53 am ON WEDNESDAY (Aug 19).

Noble pledged to investors Monday to boost operating profit to more than US$2 billion in the next three to five years from US$1.49 billion in 2014. Mr Alireza also said in an interview with Bloomberg Television on Tuesday that the pressure has made Noble a better company, and that it wants to continue as a publicly traded entity.