This article first appeared in The Edge Malaysia Weekly on July 27, 2020 - August 2, 2020

Last month, in clarifying a bullish article published on an investment forum, ConnectCounty Holdings Bhd said it was “in negotiations” for the possible reverse takeover (RTO) exercise involving S5 Systems Sdn Bhd, a subsidiary of S5 Holdings Inc, a company expected to bag a lucrative contract from the government.

ConnectCounty’s stock gained over 150% from 13.5 sen in early June to 34.5 sen on June 12.

Barely a month later, Ancom Logistics Bhd announced that it was officially in talks with S5 for an RTO.

A website claimed that PDZ Holdings Bhd, an ailing shipping company, was forming a joint venture with loss-making Sanichi Technology Bhd to develop an e-commerce logistics hub in Johor, costing over RM1 billion.

PDZ was also speculated to have won a RM600 million contract from either Alibaba Group Holding Ltd or Tencent Holdings Ltd. PDZ confirmed some of the rumours, saying discussions are ongoing.

Shares in PDZ surged from four sen to 23.5 sen over a matter of weeks.

On July 22, Bioalpha Holdings Bhd announced a partnership with Guizhou Yuhexin Trading Ltd and Hainan Shifengfu Co Ltd in China for a business deal worth RM426.7 million a year. Its stock started moving on July 17, adding 148% at its close on July 23.

Focus Dynamics Group Bhd’s stock hit a record high of RM1.36 on July 23, nudging up its market capitalisation to RM2.72 billion. The counter has risen more than 230% since December last year.

When questioned on the rise, the response is familiar: “The group has been in discussions for several opportunities to potentially acquire strategic stakes in food and beverage companies.”

The company has been in the red in 10 out of the last 11 years. How does it justify a RM2.72 billion market capitalisation?

Has the market lost touch with reality? Should regulators be doing more to ensure market integrity and orderly price discovery?

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