Trading Resumes For Erratic Trio

3Asiasons Capital Limited (SGX: 5ET), Blumont Group Limited (SGX: A33) and LionGold Corp Limited (SGX: A78), saw their trading suspensions lifted this morning. The erratic trio was suspended by the Singapore Exchange (SGX) on Friday after their shares slumped unexpectedly.

However, the lifting of suspension has some curbs. The three companies will be deemed as “designated securities”, which carries with it two trading restrictions:

  1. Short-selling will not be allowed
  2. Contra-trading will not be allowed

This means that traders are not allowed to sell shares first, looking to buy them later. Traders must also make cash payment at the time orders are executed instead of the more usual three-day settlement period.

According to the SGX Rule Book, a company may be declared a designated security if it is in the opinion that “there has been manipulation of the security, excessive speculation in the security or it is otherwise desirable in the interests of markets established or operated by SGX” .

Friday’s dramatic plunge saw around $5.2 billion wiped off the three companies. Interestingly, at its peak, Blumont was worth more than some blue-chip companies such as Olam International Limited (SGX: O32), ComfortDelGro Corporation Limited (SGX: C52) and SIA Engineering Company Limited.

This episode is a timely reminder of that we need to vigilant against being sucked into euphoria that sweeps over the market once in a while. We should always carry out proper due diligence and have a thorough understanding of what we are buying into.

We certainly do not want to buy into a company just because the share price rose 15% the previous day.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.