About the Post

Author Information

TAKING STOCK – Record oil prices beat down markets

Trading curbs on Uni-Asia spark fears of similar moves on other soaring stocks

THE bull run in China-related stocks was stopped in its tracks yesterday as bourses from Hong Kong to Sydney turned jittery over soaring crude oil prices.

Market sentiment in Singapore was also spooked as some brokerages imposed trading curbs after the recently listed Uni-Asia Finance had a spectacular run-up.

Traders fear that similar curbs might be placed on other counters that have risen sharply during the dramatic rebound from August’s sub-prime lows.

‘The mood change was so drastic. We were still brimming with enthusiasm as we came into the office. The screen started to flash red and everyone wanted to get out,’ said a dealer yesterday.

Most Asian markets had initially taken Wall Street’s overnight weakness in their stride. Singapore’s Straits Times Index (STI) was down just 20 points, while Hong Kong’s Hang Seng Index rose 380 points, or 1.2 per cent, early on. But sentiment deteriorated as the crude rose from US$86 a barrel to nearly US$88, spooked by concerns that Turkey will invade Iraq and disrupt supplies.

In the rush for the exits, China stocks were among the worst hit as they have been the biggest beneficiaries during the recent run-up.

While the STI ended 51.3 points, or 1.33 per cent, lower at 3,810.72, the PrimePartners China Index, which tracks 25 China counters, fell 2.5 per cent to 297.71. The Hang Seng closed down 586.23 points.

The big blue-chip losers included Singapore Airlines, down 50 cents at $19.60, and Singapore Exchange, 40 cents lower at $15.40. China favourites such as Yangzijiang Shipbuilding lost 11 cents to $2.53.

With nerves already fraying, traders then had to deal with the plunge in the shares of Uni-Asia, which listed only two months ago.

With soaring oil prices turning the big picture murky, traders fear smallish China stocks could be hit by the kind of sharp sell-off that belted penny stocks in July.

Uni-Asia, which arranges the financing of transport-related assets, was set up by former Japanese bankers and is run out of Hong Kong. In just two days, its shares have plunged by 96 cents, or 38.4 per cent, to $1.54, wiping $238 million off its market value.

Traders said the selldown started after Kim Eng Securities ‘imposed trading restrictions’ on the stock on Monday. This came after the shares had quadrupled over the past three weeks to close at a record $2.50 last Friday.

Kim Eng told its dealers to get upfront payments from clients before they bought Uni-Asia shares.

The news sent Uni-Asia shares down 55 cents on a hefty volume of 62.9 million shares on Monday.

Other brokerages, including UOB Kay Hian and CIMB-GK, followed suit yesterday, triggering another selldown.

The shares dived 41 cents to close at $1.54 with 53.5 million units changing hands.

‘The market is rife with rumours on the stock but nobody knew exactly what was going on. It is not surprising that brokerages are imposing cash upfront payments because its rise was simply incredible,’ said a remisier.

A Singapore Exchange query on Monday also produced a blank.

Uni-Asia said there has been no substantial changes in its list of major shareholders, despite the heavy trades in its stock.

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: