ZLBT Chats

Friday, November 18, 2011

Should speculative stocks be designated?

I fully concur with Risen Jayaseelan’s views in his article, ‘Should stocks be designated?’ in Starbiz, Nov 16, that the SC’s decision to designate Harvest Court is too harsh and too interfering and has dampened the speculative ingredients that make markets exciting.

The negative effect has been so precise that immediately a day after the designation, the entire market sentiment came crashing down.

Investors, speculators and specifically the day-traders are the ones who are the “starters and makers” of an exciting market, and they know very well the consequences of speculation in the event of negative breaking news.

They are more than willing to face the effect of such negative news and probably they are ready to cut losses in such event and most certainly, the losses they could suffer would certainly not be as severe as those of a sudden designated stock.

Is there anything wrong for an investor to take the risk upon hearing “reported” news of back door listing or in anticipation of assets injection? Dear SC, is there anything wrong on such risks taking?

Common sense will also tell us that day-traders are volume makers as they jump in and out of the same stock and on the same day as the prices of the stock fluctuates throughout the day. Now SC, is there anything wrong with that? Our volume of trade is nothing in comparison with many matured markets as in Hong Kong, Singapore or China apart from the Dow Jones.

The only right thing the SC had done was the issuance of UMAs (unusual market activity) on speculative counters for awareness of investors and speculators alike, but the final decision to designate a stock should come onkly after a final warning or notice had been issued.

Unless the SC has conspired with “ill intention”, speculators, day-traders and market makers should not become victims of such unfair and harsh decision. They are given no chance to escape and on a worst case scenario, some of them could even go bankrupt.

The harsh decision by the SC has left some stones unturned, leading to widely speculated questions of suspicions. Why didn’t the SC start any investigation on insider trading? Is there any clarification with the individuals involved in the rumours irrespective of whom they are politically connected?

In the first place, how and where did the volume of trade come in? The least action the SC should remedy and act immediately is to lift the “designation” and allow people to trade fairly without the
burden of upfront cash.


Bursa Malaysia Securities Berhad (Bursa Malaysia) has declared the securities of Harvest Court Industries Berhad (HARVEST) and Harvest Court Industries Warrants (HARVEST-WA) as Designated Securities with effect from 9.00am Wednesday, 16 November 2011 until further notice. In order to facilitate dissemination of the designation, the above securities will be suspended with  effect from 9.00am to 5.00pm, Tuesday, 15 November 2011.

The decision to designate the securities of HARVEST and HARVEST-WA is due to excessive speculation observed in the trading of both securities and has been taken in the interest of ensuring a fair and orderly market.

With the designation, trading in the counter continues but will require payment upfront before buying and a free balance of securities before selling.

Investors are advised that their investment decisions should be made on an informed basis including an assessment of the fundamentals of the company.

Head, Issuers, Listing Div BSKL  

NOTE : Harvest Court Industries Bhd is a company in the red for many years. Among it's Board of Directors sits one MOHD NAZIFUDDIN BIN DATO' SRI NAJIB, son of Malaysian Prime Minister Dato' Seri Najib Razak. Ahem!


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