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Saturday, 1 November 2014

Recent Singapore market events: random reports disrupting share prices

10:12 Posted by szcszc No comments
There has been a spat of recent events whereby research reports of Singapore-listed companies are being released by unknown authors online. Of which, these reports are circulated widely, leading to high volatility of the targeted company's share prices. A current example is Sino Grandness. If you have not heard of this, do click on the link to find out more:

http://business.asiaone.com/news/sino-grandness-refutes-negative-report-business

While these reports are merely speculation and personal opinions of the authors on the company, they have impacted the share prices heavily as the market regards these reports seriously in relation to its financial standing. However, these reports are also biased in a way that it presents the company that is aligned to the interest of the author. Hence, the authenticity of the research might be of a concern, such that it is manipulated to direct the crowd.

In the case of Olam, the share price has dropped to a low of around $1.50 when the reports from the shortists were released. Of which later, Temasek unit offers to buy Olam at a premium of $2.23. Should an investor be able to deeply analyse the company and realise that Olam is truly undervalued, he/she would have stand to gain almost 50% returns when the news was announced.

Comparing that to the share price of Sino Grandness, which has fallen by more than 40% from its previous high, should the reports proved to be untrue, it could be an opportunity for investors to invest at a seemingly cheap valuation. This is, of course, subjected to one's own opinions and research of the data and financial standing of the company, before any investment is made.
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