SINGAPORE Singapore Exchange Ltd (SGX) (SGXL.SI) is to lift trading curbs on three inter-linked companies whose S$8.7 billion ($7 billion)slump in combined market value in just two days earlier this month had sparked criticism of the SGX's market controls.
SGX said on Friday it was lifting curbs on Blumont Group Ltd (BLUM.SI), Asiasons Capital Ltd ASNS.SI and LionGold Corp Ltd (LION.SI), restoring their full access to the equity market.
Trading in the three had been suspended on Oct 4. after their shares suffered dramatic reversals from massive increases built up earlier this year. SGX subsequently declared them "designated securities", meaning traders could not short-sell them and had to pay for any purchases with cash upfront.
These trading curbs, the first to be imposed on any Singapore-listed stocks for five years, will be lifted on Monday, though SGX said on Friday it would continue to monitor trading of all three.
The slump in the three stocks had turned them back into the penny stocks they were before their dramatic gains earlier this year. Analysts had said the gains were not been backed by obvious business fundamentals and there was criticism in local media that the SGX had stepped in too late to tame the volatility.
SGX said it was lifting the curbs having monitored trading patterns, volumes and intra-day price moves over the past two weeks. "Trading in these stocks has since become more stable," said head of market surveillance Kelvin Koh.
But the exchange did not say if there was any formal investigation into what had led to the wild price swings in the three, which share some common links - Asiasons is the largest shareholder in LionGold, while LionGold and Blumont have an independent director in common.
Blumont, which had seen the largest rise of the three stocks before losing around S$6 billion in market value, said late on Thursday it was to receive $200 million in funding from U.S. investment firm Platinum Partners, though the money was contingent on the trading curbs being lifted.
The company also said on Wednesday it had raised around S$43.05 million from a rights issue of new stock.
"We can now focus all our energies on accelerating the growth of our mineral and energy resources business with the funding that has been provided by Platinum," said incoming chairman Alexander Molyneux after SGX's announcement. Molyneux bought a 5.2 percent stake in Blumont on October 7.
"The core of our strategy right now is copper, coking coal and uranium. They are among our preferred commodities and they are also commodities where we already have something going on," Molyneux told Reuters in an interview earlier on Friday.
Platinum Partners will subscribe to convertible bonds issued by the company and Blumont will in turn use part of the proceeds to buy $100 million of convertible bonds in Australia-listed Discovery Metals Ltd DML.AX.
Shares in Discovery jumped as much as 15 percent on Friday, but pared some of the gains to close 5.3 percent higher.
However Asiasons and LionGold have both had to delay fund-raising plans.
Platinum Partners' PPLO fund had been due to subscribe to part of a S$202 million share placement in LionGold, but that deal was called off late last week.
Platinum Partners' Value Arbitrage fund was also due to receive stock in Asiasons as part of a share placement used to fund Asiasons' purchase of a stake in oil explorer Black Elk Energy Offshore Operations LLC. That deal is in limbo after SGX queried whether Asiasons had a strong enough mandate to make that share issue.
In Singapore, Blumont shares rose 17 percent on Friday, Asiasons gained 18.5 percent and LionGold advanced 6 percent. But their stock prices were still down from the record levels reached earlier this year. ($1 = 1.0382 Australian dollars) ($1 = 1.2405 Singapore dollars)
(Additional reporting by Anshuman Daga; Editing by Ryan Woo and David Holmes)