Blumont Group Ltd., Asiasons Capital Ltd. and LionGold Corp. shares fell by a record as restrictions were imposed on their stocks, erasing S$8.6 billion ($6.9 billion) from their market value over two days.
Blumont, which invests in minerals and energy, slumped 85 percent to 13 Singapore cents at the close in Singapore, extending a 56 percent decline on Oct. 4. The two-day, 90 percent drop shaved S$4.9 billion from its market capitalization. The plunge also prompted the company to scrap a deal to buy Australia’s Cokal Ltd. for S$146 million.
The exchange said yesterday shares of the three companies have been declared designated securities, prohibiting investors to sell them unless they hold the same quantity of stock. Buyers must make cash payments for the transactions, it added.
“SGX is telling investors to be mindful of the risks involved in investing in these volatile stocks,” said Desmond Chua, an analyst at CMC Markets in Singapore, referring to the Singapore Exchange. “This would help to ensure proper corporate governance in particular companies.”
Blumont will hold a press conference at 2 p.m. Singapore time tomorrow.
Trading of the three commodity investors were suspended by the exchange on Oct. 4 to safeguard market interest.
“SGX will continue to monitor the trading of these designated securities and review the circumstances in due course to end the declaration,” the exchange said in the statement yesterday.
Asiasons, which last month bought a stake in U.S.-based oil and gas producer Black Elk Energy Offshore Operations LLC, tumbled 86 percent to 15 Singapore cents, adding to a 61 percent plunge on Oct. 4. It lost S$2.5 billion in market value over the two days.
LionGold, which slumped 42 percent on Oct. 4, dropped 71 percent to 25 Singapore cents as it resumed trading this afternoon. The decline over the two days erased S$1.2 billion in market capitalization.
The company said today it’s in advanced negotiations for a possible acquisition of Minera IRL Ltd., a gold explorer in Peru, Argentina and Chile. No formal deal has been signed, it said. LionGold said last month it was in talks to buy as many as three gold mining assets.
While existing regulations in Singapore are sufficient for company disclosures, regulators may need to introduce circuit breakers to automatically suspend trading of shares that have moved sharply higher or lower, David Gerald, president of Securities Investors Association of Singapore, said Oct. 4
“A circuit breaker mechanism will certainly help to give early warning to investors,” Gerald said in an e-mailed response to queries.
Regulators around the world have stepped up oversight of capital markets after the global financial crisis in 2008. The MAS established a 13-member council in 2010 with a goal to boost corporate governance standards and investor confidence.