SGX explains why no Olam query
It looks at firm's financials, industry outlook, analyst reports before acting
Top of The News | Updated today at 01:03 AM
By Melissa Tan
WHEN assessing whether or not to issue a public query to a firm about unusual activity in the trading of its shares, the Singapore Exchange (SGX) takes into account several factors, including the company's financials, the outlook of the industry it is in and analyst reports.
The SGX will issue the query if the unusual trading activity cannot be explained by these factors.
The bourse operator made this statement yesterday after several commentators asked why it had not queried commodities firm Olam International when its share price and trading turnover surged
in the past few weeks - before last Friday's announcement that Temasek Holdings was planning a $2.5 billion takeover of the company.
Corporate adviser Mano Sabnani had also asked why Temasek or Olam had not requested a trading halt much earlier.
The SGX acknowledged that the 34.8 per cent rise in Olam's share price over six weeks from Feb 3 was higher than those of its peers, such as Wilmar International and Noble Group. However, it added, all three companies were trading within the price ranges set out in analysts' research reports.
"Such comparisons should be conducted with care as the financials and outlook of individual companies may differ even if they are within the same industry," it said.
Nonetheless, the bourse operator noted that potential offerors and listed companies should monitor trading activities in their stocks closely and make immediate announcements if there appears to be a leak of information on the possible offer.
It added that since March 3, listed companies must tell SGX "on a confidential basis" if they are in discussions that are likely to lead to a takeover.
"We do not discuss our dealings with regard to individual companies, including notifications as required under the listing rules. If there are possible breaches of rules or requirements, we will investigate and take appropriate action," SGX said.
"We take a serious view of all market misconduct in breach of the Securities and Futures Act, including potential insider trading and manipulation activities. We will spare no effort in conducting investigations on possible transgressions and will cooperate with regulatory agencies to enforce the law against offenders."
Olam's price rise happened before Breedens Investments, a unit of Singapore investment firm Temasek Holdings, offered last Friday to buy all of Olam's shares from its minority shareholders.
The SGX said that "while we do not prescribe a view of value or pricing of stocks", seven out of 13 analysts who issued reports on Olam last month raised their target price for the counter by up to 21.4 per cent. The 13 analysts had target prices of $1.50 to $2 for Olam.
But for Wilmar, eight analysts raised their target prices by an average of 2.6 per cent, with the highest raise being 4.8 per cent, SGX noted.
Only one analyst raised the target price for Noble last month.
Temasek's takeover offer of $2.23 apiece for Olam's shares values the company at $5.45 billion. Olam's shares rose 23.5 cents last Friday, or 12 per cent, to end the week at $2.23.
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It looks at firm's financials, industry outlook, analyst reports before acting
Top of The News | Updated today at 01:03 AM
By Melissa Tan
WHEN assessing whether or not to issue a public query to a firm about unusual activity in the trading of its shares, the Singapore Exchange (SGX) takes into account several factors, including the company's financials, the outlook of the industry it is in and analyst reports.
The SGX will issue the query if the unusual trading activity cannot be explained by these factors.
The bourse operator made this statement yesterday after several commentators asked why it had not queried commodities firm Olam International when its share price and trading turnover surged
in the past few weeks - before last Friday's announcement that Temasek Holdings was planning a $2.5 billion takeover of the company.
Corporate adviser Mano Sabnani had also asked why Temasek or Olam had not requested a trading halt much earlier.
The SGX acknowledged that the 34.8 per cent rise in Olam's share price over six weeks from Feb 3 was higher than those of its peers, such as Wilmar International and Noble Group. However, it added, all three companies were trading within the price ranges set out in analysts' research reports.
"Such comparisons should be conducted with care as the financials and outlook of individual companies may differ even if they are within the same industry," it said.
Nonetheless, the bourse operator noted that potential offerors and listed companies should monitor trading activities in their stocks closely and make immediate announcements if there appears to be a leak of information on the possible offer.
It added that since March 3, listed companies must tell SGX "on a confidential basis" if they are in discussions that are likely to lead to a takeover.
"We do not discuss our dealings with regard to individual companies, including notifications as required under the listing rules. If there are possible breaches of rules or requirements, we will investigate and take appropriate action," SGX said.
"We take a serious view of all market misconduct in breach of the Securities and Futures Act, including potential insider trading and manipulation activities. We will spare no effort in conducting investigations on possible transgressions and will cooperate with regulatory agencies to enforce the law against offenders."
Olam's price rise happened before Breedens Investments, a unit of Singapore investment firm Temasek Holdings, offered last Friday to buy all of Olam's shares from its minority shareholders.
The SGX said that "while we do not prescribe a view of value or pricing of stocks", seven out of 13 analysts who issued reports on Olam last month raised their target price for the counter by up to 21.4 per cent. The 13 analysts had target prices of $1.50 to $2 for Olam.
But for Wilmar, eight analysts raised their target prices by an average of 2.6 per cent, with the highest raise being 4.8 per cent, SGX noted.
Only one analyst raised the target price for Noble last month.
Temasek's takeover offer of $2.23 apiece for Olam's shares values the company at $5.45 billion. Olam's shares rose 23.5 cents last Friday, or 12 per cent, to end the week at $2.23.
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