UPDATE 2-Singapore bourse halts trading in three stocks after plunge

Fri Oct 4, 2013 5:22am EDT

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(Adds quotes from analyst, other queries by SGX)

By Anshuman Daga and Eveline Danubrata

SINGAPORE Oct 4 (Reuters) - The Singapore Exchange Ltd suspended trading in three stocks on Friday, warning the market may not be fully informed of the companies' affairs after a plunge in their share prices, with one falling more than 60 percent.

The bourse first halted trading in diversified company Blumont Group Ltd, whose stock has risen as much as 12 fold this year, after it slumped 56 percent in morning trade. It later suspended gold miner LionGold Corp Ltd and investment company Asiasons Capital Ltd.

Shares in Asiasons, which is the biggest investor in LionGold and whose stock nearly trebled in the past month, fell 61 percent before trading was halted. LionGold, whose stock had jumped as much as 60 percent this year, fell 42 percent.

None of the three companies responded to requests by Reuters for comment. The SGX declined to give comment beyond its statement that trading had been temporarily suspended "as there could be circumstances that would result in the market not being fully informed."

SGX-directed trading suspensions are fairly rare on the Singapore bourse.

"People cannot really explain why the share prices have gone up so rapidly on high volume," said William Tng, analyst at CIMB Research. "There seems to be a disconnect between the share price surge and the business in terms of cash flow and profitability."

"LionGold and Blumont have been making a series of acquisitions, but the potential earnings or returns from these acquisitions are uncertain at this point in time."

The move by the exchange comes after a spate of reverse takeovers in the market, which has seen many smaller companies break away from their core businesses and enter into unrelated areas, raising issues of corporate governance.

The SGX also queried recent trading in three other companies, Innopac Holdings Ltd, ISDN Holdings Ltd and ISR Capital Ltd, which all fell sharply on Friday.

Asiasons is the biggest shareholder in ISR, while LionGold has a stake in Innopac. Blumont and LionGold have a non-executive independent director in common.

In an exchange filing, Asiasons said it had been informed that there were "malicious market rumours that a team from the Monetary Authority of Singapore has been sent to the company's office to carry out investigations. The company confirms that such market rumours are false."

Smaller capitalised shares are the most actively traded on the Singapore bourse, which has been pushing for greater retail participation in the market.

Blumont's shares jumped to a record of S$2.54 on Tuesday, and this year's rally saw the company's market value catapult to S$6.6 billion ($5.4 billion).

Blumont, which has businesses in investment and property, moved into energy and mining industries late last year.

Earlier on Friday, Blumont said it had agreed on the terms of a proposed takeover bid of a foreign-listed coal mining company for up to S$146 million.

It had called a news conference for Friday afternoon in Singapore, but then postponed it without giving details.

On Friday evening, LionGold said it was in advanced talks to buy a stake in a gold mining company listed on three foreign stock exchanges, but the unnamed target firm was considering if the acquisition should continue in view of the suspension.

($1 = 1.2493 Singapore dollars) (Additional reporting by Rujun Shen; Editing by Rachel Armstrong and Richard Pullin)

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