Here are parts of the email that I sent to the MAS and the SGX on
July 14, 2013,
Recently, I have noticed an unusual price movement in the share price of Mirach Energy (Mirach) listed on the SGX
As seen from the Daily chart (see “chart”), Mirach's share price started a run from below S$0.10 in late May, 2013, and hit a high of S$0.48 on Friday, July 12, 2013; it eventually collapsed and closed at the day-low of S$0.385 on the SAME day.
Hence, it a space of about 2 months, the share price of Mirach has multiplied by 5 times! Yet, during this period of time, there were no announcements by the company (besides an announcement on the discovery and production of 40bpd at one field on July 10, 2013--but, it's share price has gone parabolic before that), that would indicate why such a huge jump in share price is justified.
It is bad for the image, business and reputation of the SGX if the share price of a Penny Stock is allowed to be ramped up without any valid reasons. In the long run, SGX will not be taken seriously in the Financial World, and we will lose out to the competition as we fight to attract companies to list here. Hence, the SGX needs to enforce tighter rules and regulations that bite, to prevent such unscrupulous financial dealings.
One of the main reasons that it was possible for Mirach's share price to be pushed up so high, and so quickly, was that there were market participants Short Selling (without scrips) against the stock.
Under the present SGX rules, a Short Seller who Short Sell a stock without scrips has to cover back the 'naked' Short positions at the end of the market day. Hence, it was possible for Stock Operator(s) to push up the share price of a stock just before the close of the market to force those 'naked' Short Sellers to cover back their positions and, in the process, push up the share price.
On the Daily chart attached, I have indicated 5 Green Candles (marked 1, 2, 3, 4, and 5) (a Green Candle means that the stock price has gone up for the day). These Green Candles indicated that the share price of Mirach had closed at or near the day-high—a clear evidence that the share price was pushed up near or at the end of the market day.
The SGX is essentially giving someone a Money Printing Press when it allows a company to be listed here. The company can raise funds through IPO and followed by Rights or Debt Issues.
In other instances, I have also witnessed the price of a stock being pushed up only to be followed by a Corporate Announcement after the market close. And, as one would have guessed it, the share price of that stock continued to climb the next trading session.
Some parties do have access to more market-moving information.
While it may be true that all transactions on the SGX are carried out on a “willing buyer-willing seller” basis, however, I believe, in most cases, the Sellers (Issuers of stocks) know what they are selling but the Buyers (the investors) may have no idea as to what actually they are buying!
The Monetary Authority of Singapore may also wish to consider more stringent requirements on the Listing and Quotation of shares on the SGX, and strengthen the Code of Conducts for Underwriters and Brokers.
A Stock Exchange with Public Confidence is of utmost importance to our economy. Only when a stock exchange is healthy and credible can we attract good/great companies to list here and attract investors and funds for the betterment of our economy.
