Tuesday, July 26, 2011

And DRB Went Into A Meltdown During Trading At Close.. Guess Who Came For Dinner

The following chart says it all....

Look at the last 2 transactions!

All done during trading at close.

Someone deemed it fit that DRB, which was trading between 2.28 and 2.27, should have a meltdown during trading at close.

Someone deemed it fit that DRB be traded some 33 bids lower.

Someone, on the other hand, was brilliantly smart to queue for DRB at 33 bids lower.

Someone, on the other hand, just knew that they would be lucky and that they would be able to get a small truckload of DRB shares at 33 bids lower.


Oh yeah... some trick questions.

DRB has a lot of 'warrants' issued.

Do you know which warrant would be severely impacted by this SUDDEN DRASTIC change in price?

Do you know the impact?

Who would turn out to the big loser with this sudden meltdown?

And who would be the big winner? Yeah, guess who came for dinner.


ps: Personally, from my flawed point of view, I reckon Trading At Close is the utterly most stupidest thing ever implemented. It put the stock market players at risk. Example? This DRB case yesterday says it all.

Comeon... Bursa.... stop making yourself the laughing stock. Enough is enough. Companies now list and delist anyhow they want. Delist it at a cheap valuation and relist it based on a super rich valuation. Who benefits?

I know.. you, Bursa, is a listed entity. You need to make money.

But hey.... think about it.... at whose expense?

And have you heard that good solid business is built on strong foundations? Have you not heard of this saying before?

Look at what's happening in front of you.

Are you seriously impressed with what's happening?

Comeon... protect the minority shareholders. And dude, the minority shareholders of any business, they are also your business partner.

Treat them right, and you will prosper.

Is this too difficult to comprehend?


kine said...

OMG, is this all warrant writers such
as OSK will ever need this sort of
trick to make money out from
unsuspecting investors ?
Will these tricks be repeat to other call warrant in future ?
Will SC / Bursa close one eye to all these scams?
Unless we have sufficient explanation
for all these shenanigans, Bursa itself look like a money making scam to milk all investors money very dry !

bonny b said...

Dear Moo,
It is little wonder that even tho many counters have reasonable valuations, the market is pretty dead-in-the-water. Obvious that Bursa has little interest in investor welfare. This includes those academic idiots at SC who draw up fancy financial mkts masterplans in total disregard of investors, preferring to look after mainly the issuers. Many seasoned investors have fled our shores for more level-playing fields. If EPF even stops trading, the whole mkt will collapse. All our neighbours are doing well except us. Our only hope is more govt/public money to push prices. Otherwise, we too would hv been long gone. So, good luck to all still here, cos we all need plenty of it.

Moolah said...

Bonny b: Well said. Me? I feel that the market is lacking quality investors.

Look at the case of Bumi Armada listing and relisting again.

This is such a massive black day for investing malaysia in my opinion.

The minorities were screwed when the company was delisted at a cheap valuation with Bursa Malaysia and SC doing little to help the minorities.

And with the re-listing, Bursa gave those investors another slap by allowing Bumi Armada at such a rich valuation.

Which totally makes a laughing stock of the exchange.

Oh... let me share another past delisting story.....soon.

learner said...

Dear moolah, I am a newbie in share investment. Can u explain how a sudden lower bid in trading at close effect the warrants? What is trading at close ? Thank you, trying to learn :)

Moolah said...

Trading at close or trading at last means that whatever buy or sell transaction can only be done at the last traded price. The last traded price here was 1.95.

How does it effect the warrant?

That's the trick question I was asking.

There's one warrant expiring real soon. Do you know which one?

Can you dig out the important information?

ps: Those 2 questions very important. If you do not or cannot find the answer, then you really should not touch the warrant.

learner said...

Dear moola, I shall refrain from naming the warrant but it is already mention in the earlier comment. I always thought the closing price is determine during the pre closing period (which determines the price it's traded in the trading at last period). Also if they artificially depressed the price
On that day it's not the last trading day to which the price
Of warrant is fix. Do they fix the price of the warrant on it's last trading day ? Usually it's the avarage volume weighted 5 days prior to expiry ? The share price came up the next day, unless they do the same thing today or until it expires. I am slightly confused. Thank you for your input

Moolah said...

Well, the first thing you need to realise is that none of these warrants are priced the same. They all have different

DRB CE: http://announcements.bursamalaysia.com/edms/edmswebh.nsf/all/482576120041BDAA48257825001A3C35/$File/Appendix%20_DRBHCOM-CE.pdf

The info in there isn't clear on how one calculates the Settlement Price in the formula used.

So you need to refer osk homepage and access the pdf file on DRB CE.


page 6.

Where the Settlement Price will be an amount in the Reference Currency that equals to the
arithmetic mean of the closing price of the underlying securities on the Exchange for the five (5)
schedule Valuation Dates, as determined by the Issuer and verified by the Calculation Agent,
subject to adjustments in accordance with the Conditions and without regard to any subsequently
published correction.

AND where Valuation Date(s) means in relation to the exercise of SW on the Expiry Date, each of
the five (5) schedule Market Days prior to and including the Market Day immediately before the
Expiry Date, and subject to the following Market Disruption Event provisions:

Which means the following trading days closing prices are used to calculate the average closing price.

25 Jul
26 Jul
27 Jul
28 Jul
29 Jul

And with yesterday nice meltdown price of 1.95, the 1.95 becomes an integral part of the calculation of the Settlement price.

Play around and guess the next few day closing prices.

And then make a seperate comparison. Take out THAT 1.95 price.

See the difference?

See who's the clear winner?

See who was winning suddenly became a lose thanks to the 1.95 price?

Err... what and how would anyone define what has happened?

Clear? No?

learner said...

Thank you moolah insight, I see what you mean.... i suppose they sacrifice a little for a bigger price.

solomon said...

It could be foretelling sign of market down trend?

Make no sense to buy at so many bids lower. Maybe cause by frustrated institution dealer?? 300k if mop up the million stock traded.

Need a few more days to know what is going on...

Moolah said...

Solomon: There's one telling sign today... the day after.

So DRB has recovered 'back' ... from its meltdown....

But look at the warrants.... one of them is hit pretty bad.

Can you see one of them warrants lost some 20% of its value today?


What's its expiry date?

And did yesterday CLOSING PRICE of DRB have anything to do with it?