The Monetary Authority of Singapore is reviewing the trading of Blumont Group Ltd., Asiasons Capital Ltd. and LionGold Corp. shares after a three-day slump of at least 87 percent wiped out $6.9 billion in market value.
Singapore Exchange Ltd. or SGX classified the shares as designated securities after they lost as much as 42 percent on Oct. 4, a fall that triggered the three-day drop. The trading limit, which prohibited investors from selling them unless they hold the same quantity of shares, was lifted on Oct. 18.
“MAS and SGX are conducting an extensive review of the activities around these stocks,” the central bank said in an e-mailed statement today. “This episode has also surfaced broader issues regarding the market structure and practices which MAS and SGX intend to review thoroughly.”
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 the goal of boosting corporate governance standards and investor confidence. The SGX, Southeast Asia’s biggest bourse, said after the decline of the three stocks it plans to add circuit breakers by early next year to halt trading for 10 minutes when shares move 10 percent in either direction.
Blumont fell 19 percent to 16.3 Singapore cents at the close of trade, declining for a fourth day. Asiasons slid 18 percent to 18.9 Singapore cents, while LionGold dropped 15 percent to 25 Singapore cents. That’s the lowest close in a week for all three stocks.
SGX said last week it lifted the restriction on the three stocks because trading has become more stable.
Asiasons tumbled 96 percent over the three trading days through Oct. 8, while LionGold plunged 87 percent over the three-day period. Blumont, which invests in minerals and energy, slumped 94 percent over two trading days on Oct. 4 and Oct. 7.
“MAS has been closely monitoring the exposure of the broking firms by collecting reports on losses and major counterparty exposure arising from their exposures to the three counters,” the central bank said. “The operations and financial positions of the broking firms remain sound.”