This story has been updated to include the share price charts as of 11.55am on Monday, Nov 16, 2020.
KUALA LUMPUR (Nov 14): Investors who intend to buy shares in GETS Global Bhd and Vivocom Intl Holdings Bhd via RHB must now have cash or securities as collateral in their accounts in order to execute purchase orders, according to sources familiar with the matter.
Sources said the investment bank now requires its clients to have cash on the basis of 1:2 and/or share collateral on the basis of 1:1 in their trading accounts for all purchase orders for shares in bus operator GETS Global and construction firm Vivocom, both of whose share prices had rocketed.
The requirement will take effect from the coming Monday (Nov 16), said a source.
For exceptional cases where no buy suspension is to be performed, written approval is required. However, the bank's clients will be allowed to continue selling shares in GETS Global and Vivocom.
Some quarters said the collateral requirement is common practice of any securities firm. It is a move for better risk management when there is a big leap for any counters within a short span of time.
The collateral requirement comes after a meteoric rise in the share prices of the two loss-making companies.
Vivocom, which recently completed 10-to-one share consolidation, saw its share price triple this month to close at RM1.50 yesterday. It hit a high of RM1.55 on Thursday. Prior to the rally, the stock had been hovering below the 50 sen level since mid-May 2018.
The company's market capitalisation has ballooned to RM849.68 million at present.
The rally coincided with news that Vivocom had struck a deal with Datuk Seri Chia Kok Teong to buy 45% of V Development Sdn Bhd for RM171 million through a combination of cash, issuance of consideration shares and/or irredeemable convertible preference shares. The deal is deemed as a related party transaction as Chia is Vivocom's substantial shareholder with 23.04% stake and he controls 96.8% stake in V Development.
On top of that, Vivocom also got into a subscription agreement with Golden Key Portfolio Sdn Bhd for a private placement of 169.94 million shares in Vivocom, representing 30% of total issued shares at a subscription price of 35 sen per share.
The rise in the share price of GETS Global was even more dramatic. The counter soared from nine sen on July 30 to RM3.71 this week. The main fuel of the strong rally was probably the announcement of its plan to venture into rubber glove manufacturing after the emergence of a new substantial shareholder, namely Teong Lian Aik.
The company was slapped with unusual market activity (UMA) queries by Bursa three times on Aug 26, Oct 20 and Nov 12 (Thursday) respectively.
GETS Global yesterday announced that its subsidiaries were served with a summons and claims of RM385,570 by Sinotek Autoparts Sdn Bhd (SASB).