Frankly Speaking: The risk of making a wrong assumption

This article first appeared in The Edge Malaysia Weekly, on October 19, 2020 - October 25, 2020.
Frankly Speaking: The risk of making a wrong assumption
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ES Ceramics Technology Bhd, which makes ceramic formers for the gloves industry, was actively traded early this week. The interest in the counter is likely due to shareholders in oversold positions buying back shares, leading to the high trading volume and higher share price.

How did this happen?

ES Ceramics had a bonus issue with free warrants. The entitlement date for the shares and warrants was Oct 15 but the securities will only be listed on Oct 26.

The gap was due to the company wanting to list both the securities together. As such, it had to wait for its application for the quotation of the warrants.

But shareholders who were used to the immediate listing of shares on the ex-date may have sold their shares only to realise that they do not have the bonus shares in their CDS (central depository system) accounts.

It is not clear why the company insists on listing both the bonus shares and warrants together as it is not required to do so. The lesson here is for shareholders to always check companies’ announcements.

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