SINGAPORE—Months after a multibillion-dollar plunge of three stocks spooked investors in Singapore’s small-capitalization firms, a criminal probe into the crash has put a spotlight on extensive connections among companies, investors and executives.
Singapore is one of Asia’s most important stock markets, and it is known more for conservative dividend-paying trusts than for volatile trading. But the tumble in the shares of the three companies last fall wiped out more than $6 billion in combined market value in two days and has scared off investors, sending trading volume for small and midsize shares down by a third.
Now, Singapore police have asked two of the three companies, plus at least six additional firms, to assist in the investigation, including providing data and material from senior company officials and employees. Investigators have also questioned several individuals in relation to the probe.
Singapore’s police force and central bank said last week that they are working together on the probe into possible breaches of securities laws involving trading in shares of
Asiasons Capital Ltd.
5ET.SG +1.82%
Asiasons Capital Ltd.
Singapore: SGX
$0.06
+0.00
+1.82%
April 4, 2014 5:04 pm
Volume :
4.34M
P/E Ratio
N/A
Market Cap
$54.87 Million
Dividend Yield
N/A
Rev. per Employee
N/A
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5ET.SG in
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Blumont Group Ltd.
A33.SG -2.08%
Blumont Group Ltd.
Singapore: SGX
$0.05
-0.00
-2.08%
April 4, 2014 5:04 pm
Volume :
10.45M
P/E Ratio
N/A
Market Cap
$121.40 Million
Dividend Yield
N/A
Rev. per Employee
N/A
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A33.SG in
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and
LionGold Corp.
A78.SG -2.46%
LionGold Corp. Ltd.
Singapore: SGX
$0.12
-0.00
-2.46%
April 4, 2014 5:04 pm
Volume :
23.19M
P/E Ratio
N/A
Market Cap
$123.03 Million
Dividend Yield
N/A
Rev. per Employee
$378,737
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A78.SG in
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Authorities declined to provide further information.
One of the additional six firms asked to assist in the investigation,
Magnus Energy Group Ltd.
576.SG -10.00%
Magnus Energy Group Ltd.
Singapore: SGX
$0.02
-0.00
-10.00%
April 4, 2014 5:04 pm
Volume :
5.77M
P/E Ratio
N/A
Market Cap
$36.88 Million
Dividend Yield
N/A
Rev. per Employee
N/A
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576.SG in
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, said two senior executives have been informed by police that investigators have evidence suggesting that each man may have committed “false trading and market rigging.”
No company or individual has been charged in the case.
All three firms whose shares plunged—Asiasons, Blumont, and LionGold—and the six additional firms are linked through cross shareholdings, as well as relationships among senior management. According to company annual reports and regulatory disclosures, there are more than a dozen separate connections among the nine companies, including some involving spouses and others in which directors of one company own shares in another.
All nine companies have said they weren’t aware whether any offense had been committed. Asiasons said it hasn’t been asked to assist with the police probe. The other eight announced their involvement in the investigation through disclosures to the
S68.SG -0.14%
Singapore Exchange Ltd.
Singapore: SGX
$7.03
-0.01
-0.14%
April 4, 2014 5:04 pm
Volume :
1.16M
P/E Ratio
21.33
Market Cap
$7.53 Billion
Dividend Yield
2.28%
Rev. per Employee
$1,261,080
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S68.SG in
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where they are listed. None responded to requests for further comment. The two Magnus executives and other executives questioned by police couldn’t immediately be reached for comment.
Cross shareholdings aren’t uncommon in Singapore, but market analysts say the collapse in stocks of the three companies and revelations about the ties between them and other firms have raised concerns about small-cap shares.
“Confidence has been impacted since the events in October,” said
Roger Tan,
chief executive of Voyage Research, a Singaporean stock-research firm. Average daily trading volume in Singapore’s small and midcap stocks has fallen by more than 32% in the months since the October crash, he said. The broad Singapore stock market is up slightly since October, while the small-cap index is down 4.3%.
Shares of Asiasons, Blumont and LionGold rose in less than a year from penny stocks to valuations in the billions of dollars last fall, ranking them among Singapore’s 100 most valuable companies.
The bubble burst in early October, after a series of public requests by the Singapore Exchange for the companies to explain their share-price gains. Regulators briefly suspended trading in the stocks and banned short selling and margin trading in the companies for two weeks. Short selling is a wager that a stock will decline, and margin trading is buying shares with borrowed money.
At the time, the companies had said they weren’t aware of specific reasons behind the price moves. But they cited as possible factors proposed acquisitions of other companies, as well as trading restrictions placed by some brokers to curb speculative trading in those stocks, among other reasons.
Shares of Blumont, a resources and mining holding company, had climbed more than eightfold in the first nine months of 2013, peaking at a record 2.54 Singapore dollars (US$2.02) and boosting its market value to S$6.3 billion from S$508 million. Shares of Asiasons, an investment firm, jumped nearly threefold over seven sessions in September to an all-time high of S$2.91. LionGold, which invests in gold-mining businesses, gained 55% from mid-July to late August to peak at S$1.755. These gains were wiped out in early October, returning all three issues to penny-stock status.
On Friday, Asiasons gained 1.8% to close at 5.6 Singapore cents, Blumont closed 2.1% lower at 4.7 Singapore cents, and LionGold finished down 2.5% at 11.9 Singapore cents.
In February, Singapore’s central bank and stock exchange proposed a broad set of market overhauls, including minimum trading prices for stocks and a requirement that brokers collect collateral from clients. The regulators didn’t cite the investigation as a reason for making the changes.
A review of company annual reports and regulatory disclosures shows ties between Asiasons, Blumont, LionGold and the six other companies, which operate businesses ranging from oil-and-gas services to wholesaling of electrical appliances. The six are:
Annica Holdings Ltd.
5AL.SG 0.00%
Annica Holdings Ltd.
Singapore: SGX
$0.01
0.00
0.00%
April 3, 2014 12:00 am
Volume :
1.08M
P/E Ratio
N/A
Market Cap
$19.68 Million
Dividend Yield
N/A
Rev. per Employee
N/A
04/06/14 Singapore Stock Probe Highligh…
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5AL.SG in
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,
Innopac Holdings Ltd.
I26.SG -12.50%
Innopac Holdings Ltd.
Singapore: SGX
$0.01
-0.00
-12.50%
April 4, 2014 5:04 pm
Volume :
24.84M
P/E Ratio
N/A
Market Cap
$48.51 Million
Dividend Yield
N/A
Rev. per Employee
N/A
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I26.SG in
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,
IPCO International Ltd.
I11.SG 0.00%
IPCO International Ltd.
Singapore: SGX
$0.01
0.00
0.00%
April 4, 2014 4:47 pm
Volume :
27.54M
P/E Ratio
N/A
Market Cap
$61.21 Million
Dividend Yield
N/A
Rev. per Employee
N/A
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I11.SG in
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,
ISR Capital Ltd.
5EC.SG -1.23%
ISR Capital Ltd.
Singapore: SGX
$0.08
-0.00
-1.23%
April 4, 2014 4:41 pm
Volume :
62,000
P/E Ratio
N/A
Market Cap
$17.12 Million
Dividend Yield
N/A
Rev. per Employee
N/A
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5EC.SG in
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,
ITE Electric Co.
581.SG -10.64%
ITE Electric Co. Ltd.
Singapore: SGX
$0.04
-0.01
-10.64%
April 4, 2014 3:48 pm
Volume :
109,000
P/E Ratio
N/A
Market Cap
$5.77 Million
Dividend Yield
N/A
Rev. per Employee
N/A
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and Magnus Energy. The documents are the most recent available, but it isn’t clear when the cross shareholdings began or their status now.
Some of the relationships are direct investments, such as Asiasons, an investment firm, holding an 8.9% stake in LionGold and more than a quarter of ISR Capital, according to company filings. Others involve people. LionGold Executive Director
Wira Dani Abdul
Daim, son of former Malaysian Finance Minister Daim Zainuddin, is a major shareholder in both Magnus and ISR Capital, according to company annual reports. Mr. Wira couldn’t immediately be reached for comment.
IPCO Chief Executive
Quah Su-Ling
had invested up to S$120 million in shares of Asiasons, Blumont and LionGold after opening trading accounts with foreign brokers in February 2013, according to a Singapore court document related to a lawsuit involving Ms. Quah. She couldn’t immediately be reached for comment.
Some of the companies are linked by common corporate officers and ties between senior management. Asiasons Capital joint managing director
Jared Lim
is linked to Blumont and Innopac through his wife,
Dian Lee,
managing director of Malaysian property firm Clear Water Developments Sdn. Clear Water owns 6.97% of Blumont and 7.75% of Innopac, according to regulatory filings. Mr. Lim and Ms. Lee didn’t immediately respond to requests for comment.
—Ben Edwards in London contributed to this article.