Short-selling of Blumont and Asiasons despite curbs: SGX

PHOTO: Short-selling of Blumont and Asiasons despite curbs: SGX

The Singapore Exchange (SGX) on Thursday said short-selling of shares in Blumont Group and Asiasons Capital took place on Monday, despite curbs on such activity on those counters.

"We will be investigating these cases and take the appropriate disciplinary actions as necessary," said Mr Kelvin Koh, head of market surveillance at SGX.

Last Friday, the SGX took the rare move of suspending trading in Blumont, Asiasons and a third counter, LionGold Corp. Those three counters had slumped on Friday, after a dizzying run-up in recent weeks. On Sunday, it said the three stocks could resume trading on Monday, but declared them "designated securities".

Buyers of shares in the three companies must pay cash upfront instead of getting the usual three-day grace period to make payment.

The bourse also disallowed short-selling in these counters, a strategy where traders sell shares they do not own, which they believe will fall, with a view to buying them back at a lower price later and pocketing the difference.

There are two ways to do short-selling. One involves borrowing script to sell, and returning it to the original owner later. The second involves "naked" short-selling, where no shares are borrowed.

Mr Koh did not say how many shares in Blumont and Asiasons were short-sold but clues can be gleaned from Thursday's buying-in market, which will include only "naked" shorts on Monday which were not covered by on Thursday. There were purchases of 53,000 Asiasons shares and 73,000 Blumont units on the buying-in market on Thursday, so the magnitude of short-selling will be at least this.

"The SGX will continue to monitor closely the market in the three designated securities," said Mr Koh. "We will assess the trading conditions and lift the designation as soon as it is appropriate to do so."

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