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INSIDE MARKETS – Sellers outweigh buyers in bearish trading

Asean China Investment Fund was one of the top sellers as it lowered its stakes in Unionmet and SunVic Chemical, writes ROBERT HALILI

BEARISH clouds are looming as the trading environment turned negative last week. In all, 28 companies saw 100 director and substantial shareholder disposals while 35 firms had 72 acquisitions. The number of disposals was more than double the previous week’s 48 sales while the number of purchases was sharply lower than the 124 acquisitions in the first week of September.

Last week’s trades were also significant in that it was the first time since the end-July market correction that sellers recorded more trades than buyers. Funds were also bearish with nine asset managers posting 43 disposals against eight institutional shareholders with 30 acquisitions. The number of disposals was nearly triple the previous week’s 16 sales.

Among the top sellers last week was Asean China Investment Fund LP as the group lowered its respective stakes in Unionmet (Singapore) Ltd and SunVic Chemical Holdings to below 5 per cent.

Also bearish was The Capital Group Companies – the group unloaded more shares of ComfortDelGro Corporation at sharply lower than its sale price in June. Investors should also watch out for Shining Corporation Ltd as heavy sales by Louisson Investments Pte Ltd lowered its stake by 79 per cent to 1.8 per cent.

On the positive side, the executive chairman of Hong Kong-based English language newspaper South China Morning Post, Kuok Khoon Ean, boosted his stake in Wilmar International Limited by 257 per cent last week at sharply higher than his purchase price last month.

Unionmet (Singapore) Ltd

Asean China Investment Fund LP ceased to be a substantial shareholder of metals producer Unionmet (Singapore) Ltd on Sept 12 following the sale of five million shares at an undisclosed price, which reduced its direct holdings by 25 per cent to 15 million shares or 4.1 per cent of the issued capital. Investors should note that the counter surged on that day from the previous day’s 25 cents close to 37 cents. Prior to that price surge, the stock had been on a downtrend since the first week of February from 91 cents. The disposal by Asean China Investment Fund was a very bearish signal for the stock as the group previously sold 16.6 million shares on the stock’s trading debut on Jan 31 at an estimated price of 75 cents each. That sale in January was made at a huge profit, given the IPO price of 37 cents each. Unionmet (Singapore) announced its interim results in July with net profit down by 52 per cent to US$1.938 million for the six months to May 31, 2007. The stock closed at 34 cents on Friday.

SunVic Chemical Holdings Ltd

Asean China Investment Fund LP ceased to be a substantial shareholder of chemical producer SunVic Chemical Holdings on Sept 12 following the sale of 22 million shares at an estimated price of 39 cents each. The trade reduced its direct holdings by 43 per cent to 29.4 million shares or 4.9 per cent. The disposal was made on the back of the 64 per cent decline in the share price since the second week of February from $1.08. The sale by Asean China Investment Fund was likely made at a profit based on the stock’s IPO price of 30 cents each. The sentiment is not entirely negative as chief executive officer Sun Liping recorded his first trades since listing with 1.36 million shares purchased on Sept 10 at 30 cents each. The trade boosted his deemed holdings to 325.2 million shares or 53.9 per cent. Alternate director Teo Yi-Dar also acquired an initial 50,000 shares on Aug 30 at 26 cents each.

SunVic Chemical Holdings announced its Q2 results on Aug 14 with net profit down by 42.9 per cent to 23.307 million yuan (S$4.7 million) for the three months to June 30, 2007. Earnings in the first half fell by 50 per cent to 31.65 million yuan. The counter, which was listed on Feb 5, closed sharply lower from its trading debut price of 81 cents to 36.5 cents on Friday.

ComfortDelGro Corporation Ltd

The Capital Group Companies, Inc unloaded more shares of bus and taxi services provider ComfortDelGro Corporation at sharply lower that its disposal-related filing price in June. The group reported a disposal-related filing on Sept 11 of 25.4 million shares, which reduced its deemed holdings by 18 per cent to 119.9 million shares or 5.8 per cent of the issued capital. The filing stated that the sales were made from June 21 to Sept 11. The stock during that period fell from $2.30 to $1.86. Capital previously sold 508,000 shares on June 20 at an estimated price of $2.26 each. The sales since June were made at a profit based on the net 30 million shares that the fund manager acquired from May 2005 to Jan 11 this year at $1.43 to $1.65 each. Capital became a substantial shareholder in May 2005 following the purchase of 12.9 million shares at $1.64 each, which raised its interest to 5.6 per cent.

ComfortDelGro announced its Q2 results on Aug 13 with net profit up by 19 per cent to $70.8 million for the three months to June 30, 2007. Earnings in the first half rose by 10.8 per cent to $138.1 million. The stock closed at $1.96 on Friday.

Shining Corporation Ltd

Heavy sales of 10.1 million shares by Louisson Investments Pte Ltd in construction contractor and building materials distributor Shining Corporation this month reduced its stake by 79 per cent to 1.8 per cent. The disposals were made from Sept 6 to 13 at estimated prices of 17.5 cents to 23 cents each. The sales, which accounted for 31 per cent of the stock’s trading volume, were made after the counter rebounded from 10 cents on Aug 29. Louisson Investments last sold 6.5 million shares on Sept 13 at 19 cents to 23 cents each, which lowered its direct holdings by 71 per cent to 2.7 million shares or 1.8 per cent. The group previously sold 610,000 shares on Sept 7 and 3.1 million shares on Sept 6 at estimated prices of 17.5 cents to 19.5 cents each. The heavy sales this month were not surprising as the shareholder also disposed of 3.8 million shares in July at an estimated price of 18.5 cents each.

The sales in the past three months were made at a profit based on the group’s initial filing in 2004. Louisson Investments became a substantial shareholder in December 2004 following the purchase of 14 million shares at 15 cents each, which raised its interest by 539 per cent to 17.3 per cent. The stock closed at 17.5 cents on Friday.

Wilmar International Ltd

Non-executive director Kuok Khoon Ean acquired more shares of agribusiness firm Wilmar International (formerly Ezyhealth Asia Pacific Ltd) at sharply higher than his purchase prices last month. The director bought 180,000 shares on Sept 12 at $3.56 each, which boosted his deemed holdings by 257 per cent to 250,000 shares. He previously acquired 20,000 shares on Aug 29 and an initial 50,000 shares on Aug 16 at $2.94 each. The fact that he acquired significantly more shares this month at a sharply higher price is a very bullish signal for the stock. Also positive earlier this year was PPB Group Berhad with 987,000 shares purchased on July 31 at an estimated price of $3.40 each. The trade increased its direct stake to 559.1 million shares or 8.8 per cent. The group also has a deemed interest of 604.2 million shares or 9.5 per cent. Wilmar International announced its Q2 results on Aug 14 with net profit up by 142.4 per cent to US$39.553 million for the three months to 30 June 2007. Earnings in the first half rose by 105 per cent to US$65.583 million. The stock closed flat from Kuok Khoon Ean’s purchase price to $3.56 on Friday.

The writer is managing director of Asia Insider Limited

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