Thursday, July 02, 2009

Ingress: Yesterday's Hot Stock Got Even Hotter!

Posted yesterday: Today's Hot Stock: Ingress Corporation

As reasoned, fundamentally there wasn't enough justifications for Ingress Corporation to sky rocket.

Company's fundamentals were poor. More so that in April it failed to deposit its sukuk payment of 25 million. ( see
Ingress Fails To Make Sukuk Repayment, Stock Gets Slammed! ).

Yes it announced it was awarded a 61.9 million contract from Tenaga but then it can be argued that the contract is no big deal since Ingress past history showed that its PER (Power, Electric and Rail) division had a history of losing money.

But yet the stock soars.


Yesterday the stock closed at 34.5 sen. See the amazing surge below.

This morning, last I saw, the stock was trading at 41.5 sen. Up another 20%!

Life is good.

Hmmm... how ironic.

Ingress wasn't even queried yesterday!

I wonder if it will today!

Hmmm... how ironic when we have articles like this in our financial newspapers. 20th June 2009 Monitoring market manipulations

  • STOCK market shenanigans are as old as the market itself. From insider trading to full-blown stock price manipulation, market participants have long been trying to maximise profits from share trading by not playing by the rules.

    As the market matures, such shady manoeuvres have slowly been weeded out. However, these have not been totally eliminated even though investors are getting more sophisticated and the regulators’ surveillance net is being cast wider.

    “These things happen when there is too much easy money,” said Jupiter Securities head of research Pong Teng Siew.

    Vigilance against manipulation is an ongoing battle for the authorities, which have over the years learnt from every period of stock market excess.

    Aokam Perdana Bhd, PWE Industries Bhd and Idris Hydraulic (M) Bhd were some of the punter favourites in the mid-1990s, when the ramping up of shares was common place prior to the Asian financial crisis.

    In fact, the second board used to be a gold mine for excessive speculation as share prices soared to levels that would be unthinkable today.

    Repco Holdings Bhd was the most infamous of the ramped-up stocks. Its share price prior to the Asian crisis in 1997 hit a high of RM140.50. The stock has since been delisted.

    But the highest-priced stock was biscuit maker Hwa Tai Industries Bhd. Its share price prior to the 1997 crisis was just over RM200 a share. On an adjusted basis, that would be equivalent to RM96 today. Hwa Tai closed on Thursday at 62.5 sen.

    Speculation was also rife during the dotcom craze in 1999 to early 2000, when a number of technology-linked stocks surged.

    In 2001, the speculation reached ridiculous levels when the price of Ho Wah Genting Bhd warrants exceeded that of the mother shares.

    That was followed by a number of other ramped-up counters such as Lipo Corp Bhd, Kobay Technology Bhd, General Soil Engineering Bhd and Sinmah Resources Bhd during a play on a latex stimulant called reactorrim.

    In 2005, the Fountain View Development Bhd case boiled over and caused huge losses among brokers. Kosmo Technology Industrial Bhd shares attracted intense speculative interest and was made a designated counter.

    The last headline-grabbing speculative play was Iris Corp Bhd. The Mesdaq counter saw its share price rise about seven-fold in a short period of time.

    These market controversies have been invaluable lessons for the regulators. Accordingly, they have devised techniques, tools and procedures to deal with such speculation that borders on market manipulation.

    Even though the spikes in volumes in the recent rally hovered at record levels, the instances of excessive share speculation or blatant manipulation, as in the Fountain View case, have been limited.

    “The scope of surveillance covers all dimensions of the trading activities. If there is any evidence of market manipulation, the SC (Securities Commission) and/or Bursa Malaysia will investigate and take appropriate enforcement action,” an SC spokesman told StarBiz in a report on Thursday.

    “This is further complemented by SC’s investor education programmes conducted regularly to help investors make informed investment decisions.”

    Hunt for red flags

    But the regulators are not sitting idly as they might have done in the past. In recent days, Bursa Malaysia has issued a number of unusual market activity (UMA) queries.

    The UMA queries are designed to extract more information from a company as to why a company’s share price is moving dramatically. The principal view behind such an action is that such price movements should be explained. Trading volumes are also scrutinised.

    Whereas Bursa’s warnings and queries represent a visible element of regulatory oversight, the behind-the-scenes work is also comprehensive and has been silently effective.

    The authorities have penalised dealers for actions deemed to be not fit and proper. In such cases, suspect brokers have been suspended for months at length, effectively sealing their ability to trade and make money. In short, it hurts them via their wallets.

    This is part of a code of conduct for brokers, which emphasises diligence.

    Another step was to get directors and heads of stockbroking companies to comply with new guidelines and rules. People in charge of various operations in broking houses are expected to watch out for red flags that pop up when there are suspicious trades.

    The brokers’ economic losses or gains are also being monitored for any excessiveness, and there has been constant mining for patterns or signals that indicate irregular activities.

    These steps are part of a more exhaustive approach being taken to combat manipulation, in which regulators will act when red flags are raised early instead of waiting to prove a criminal case in a court of law.

    Day trader watch

    Stockbroking companies are also in the loop in ensuring a more orderly market. Losses from past financing indiscretions, such in the Fountain View incident, are no longer tolerated, and the companies themselves are monitoring against unhealthy practices.

    The system might not be perfect but improvements have been made.

    The crisis on Wall Street has also indirectly helped surveillance of the stockbroking firms. Checks at the onset of the crisis, intended to gauge the exposure of margin accounts by stockbroking firms, gave an insight into the activity of those companies.

    While the movement in the stock market, in particular involving the second and third liners, is similar to what some other regional bourses are experiencing, a watchful eye is now being cast on proprietary day traders.

    The role of those 25 people, who were given licensed dealer representative status in 2007, is to act as marketmakers of sorts.

    And it appears to have worked. Liquidity has been boosted and those licensed day traders generally come into a stock when there is active trade in the beginning of the day. Those day traders are allowed to short sell a counter during the trading day.

    This is privilege granted to those people and it can be revoked. The possibility of revocation is rising as unhealthy trading patterns are emerging among a few of those licensed day traders.

    Systems, processes, guidelines and surveillance have all been ramped up to make it as difficult as possible for people to engage in manipulation activity. Nevertheless, they will not stop the more determined crooks from attempting to outsmart the regulators.

Where is my dearest UMA?