KUALA LUMPUR: The Securities Commission Malaysia (SC) needs to step up its efforts to fight market abuses to restore investors’ confidence in the local stock market, following Monday’s incident which saw a local research firm releasing an ACE Market-listed company’s quarterly financial results prematurely.
A heated debate has erupted on social media over the incident, which saw the share price of the stock concerned, Vivocom International Holdings Bhd, fall 5.6% from 18 sen on the day of the incident to close at 17 sen yesterday, with a market capitalisation of RM549.82 million. Its share price has declined more than 30% since Aug 18.
Daily trading in Vivocom fell to 8.61 million shares yesterday from 11.6 million shares on Monday. In comparison, its 200-day average trading volume was at 31.8 million shares.
Formerly a telco tower maker, Vivocom has come on investors’ radar after securing the bulk of its work contracts from China Railway Construction Corp Ltd. Year to date, Vivocom has secured RM2.8 billion in contract wins.
In the incident, CIMB Research made available online a report on Vivocom a day before the construction outfit actually released its latest quarterly results on Bursa Malaysia, with its financial numbers almost identical to Vivocom’s latest quarterly results. However, the report was quickly removed from public viewing, but not before some investors saw it.
When contacted, an SC spokesman acknowledged the incident but declined to comment further.
“The SC is aware of the matter and is looking into it,” the spokesman told The Edge Financial Daily in an email reply yesterday.
According to a spokesman from CIMB Group Holdings Bhd, the analyst covering Vivocom has been relieved from his duties temporarily while an internal investigation is being conducted.
“Any proven breaches will be appropriately dealt with when the investigation is completed,” the spokesman said.
“The group aspires to continuously uphold a high standard of integrity, backed by clear policies and procedures on its internal processes. As such, any alleged breach of policies and procedures is viewed seriously, and will be investigated thoroughly,” the spokesman added.
Vivocom executive director Choo Seng Choon declined to comment on the matter. “Sorry. No comment from my side. Not sure what happened to the analyst.”
Nevertheless, the incident has raised concerns among market participants about market integrity and that the regulator is not doing enough to address alleged stock manipulations.
“The SC must look into this matter to protect the integrity of the market. It is normal for management to give earnings guidance to analysts. But in this case, this [incident] also goes to show that certain parties are privy to inside information, while others are not,” said a market observer.
“This will put most market participants who do not have access to this information at a disadvantage,” he noted.
“Most analysts are also Chartered Financial Analyst (CFA) holders [and] every CFA holder pledges every year to uphold the highest standards of ethics and professional conduct,” another market observer said.
The latest incident comes on the heels of another alleged stock manipulation in August this year. In the earlier incident, United U-Li Corp Bhd, SLP Resources Bhd, Oriental Food Industries Holdings Bhd and SCGM Bhd saw their shares being sold down heavily, erasing a combined RM242 million in market capitalisation in a single day.
The departure of two RHB Asset Management Sdn Bhd senior investment officers was said to have sparked a wave of panic selling of the four mid-cap companies, causing their share prices to plunge between 5% and 14%.
It was reported that the selldown was initiated by a local bank-backed asset management house, which was a common shareholder of United U-Li Corp, SLP, Oriental Food and SCGM.
To date, no investigation has been launched by the SC into the alleged stock manipulation.