I mean shouldn't our financial news be reporting news instead of rumours?
Or are our financial news represent a tool for those who wants to push their shares higher?
Take Gamuda.
The shares moved higher this morning based on rumours.
Let's have a look at the chronology of events that had taken place so far.
Posted 7.55am.
- 1. KUALA LUMPUR (Dow Jones)--Several groups of investors, with the help of Middle Eastern funds, are working out a deal to take construction giant Gamuda Bhd. (5398.KU) private, The Edge reported Monday, citing an unnamed sources.
"If things pan out, there should be some developments in a month or two," said one of the sources.
Sources do not discount the possibility of Platinum Investment Management Ltd., one of Gamuda's two biggest shareholders, with a 7.49% stake, participating in the takeover, the financial weekly reported.
Unnamed sources! Just who are these sources?
Posted 8.51 am.
- 2. 0051 GMT [Dow Jones] Gamuda (5398.KU) may rise to MYR2.41 (recent high) vs Friday close at MYR2.27 (flat) as The Edge weekly reports several groups of investors with help of Middle Eastern funds planning to strike deal to privatize construction firm. "If things pan out, there should be some developments in a month or two," report cites unnamed source saying. Also, not ruling out possibility of Platinum Investment Management Ltd., one of Gamuda's 2 biggest shareholders, with a 7.49% stake, participating in takeover, the financial weekly reported. "Since the steep retreat in Gamuda's share price (from year-high of MYR5.75 to current price), all sorts of rumors have been swirling around the company, including the possibility of the company being privatized. This fresh report may create some excitement in early trade and boost Gamuda's share price," says dealer. (VGB)
Incredible! A target price is also mentioned!
Posted at 10.34 am.
- 3. 0234 GMT [Dow Jones] STOCK CALL: Affin Investment keeps Buy on Gamuda (5398.KU) but trims target to MYR2.94 from MYR3.15; follows 1.7%, 5.2% cut in FY09, FY10 EPS forecasts, lowering of property bookings by MYR100 million for both years. Adds, news report about several groups of investors with help of Middle East funds working out deal to take company private, not unexpected. Notes, Gamuda had no controlling shareholder, after sale of 70 million shares by managing director earlier this year, who further dispersed shareholding structure. "Any attempts to privatize the company at a price closer to the fair value should help investors realize potential capital gains earlier," says analyst Ong Keng Wee. Shares +4.4% at MYR2.37. (SJO)
See the point where it's mentioned that Gamuda had no controlling shareholder?
Posted 11.11am.
- 4. 0311 GMT [Dow Jones] Gamuda (5398.KU) +3.5% at MYR2.35 in heavy volume, off intraday high of MYR2.44; initial surge in share price attributed to The Edge report earlier about several group of investors planning to take company private, funded many middle eastern investors. "Talk of privatization has surfaced a number of times. Rumors on such exercise have emerged a number of times following (MD) Lin Yun Ling's decision to sell down his stake in the company to 1.7% from 5.2% in February," says dealer. However, Lin entered into afresh 5-year contract to stay on as Gamuda's MD 2 weeks ago, putting to rest fears of his departure. Dealer also notes power vacuum due to fragmented shareholding structure; Perak Royal family owns 7.5%, Platinum Investment Management owns 7.4%. Given "such depressed share prices and no controlling shareholder, Gamuda looks very appealing as a takeover target," dealer adds. Stock expected to trade within MYR2.30 to MYR2.40 for rest of day. (VGB)
Oh now this unnamed dealer says that Gamuda looks very appealing as a takeover target. I wonder why this dealer so shy to be named!
And published on Business Times, Gamuda climbs
- A newspaper reports that investors, backed by funds from the Middle East, are working on a plan to buy out the construction company
SHARE prices of infrastructure group Gamuda Bhd were higher today following reports by a local newspaper that the company may be a buyout target by a group of investors from a Middle East Fund, dealers said.
Its projects range from mega projects such as the internationally acclaimed SMART (Stormwater Management and Road Tunnel).
It is also well-known for intra-urban highways, the Kaohsiung Mass Rapid Transit system in Kaohsiung, Taiwan, the Nam Theun 1 (NT1) hydropower project in Laos, the Dukhan Highway in Qatar, and airfield and road tunnel works for the New Doha International Airport in Qatar.
There are also rumours that the company may be taken private.
As at 10.20am, Gamuda rose nine sen to RM2.36. - Bernama
How nice!
On yet another very depressing day on the local stock stock market, Gamuda traded against the general downtrend to close at 2.40, up by some 5%.
And it all started from rumours based on unnamed sources!
How blatantly nice!
Publish some articles based on rumours from unnamed sources and the stock soars!
Are you EVEN watching SC?
My friend,
ReplyDeleteSeriously, if it's misleading to the uninformed, it's irresponsible reporting.
The quality of reporting by The Edge had become bad to worse. This is not the 1st time they had cite unnamed sources about the issue. Another perfect example of buy on rumour and sell on fact...let's hope whoever done this be investigated by SC...where's the justice ?
ReplyDeleteDear Victor,
ReplyDeleteI find it extremely ludicrous that we have our financial press spinning rumours on the stock based on unnamed sources.
How do we know that the said unnamed sources?
What if they press themselves are churning out 'grand mother' stories so that they could profit from it?
Would it be wrong for me to suggest so?
I do not know.
All I know was the story was based on unnamed sources and the stock FLEW today!
How?
Sigh!
Dear BursaTradingIdeas,
ReplyDeleteI realised you wrote a piece on Gamuda too. Did you check out the sudden jump in receivables?
From my experience with Bursa and several counters that are in the midst of corporate restructuring. There is no smoke without fire!
ReplyDeleteUsually, the prices and details of the deal that you read in the media is a watered down version
Dear Fesserie,
ReplyDeleteLet me raise a simple question:
Should our financial press be used as a tool to circulate rumours?
And if the rumours for Gamuda proved to be true, and since someone inside knew, doesn't this not constitute insider trading?
rgds
Dear Moola,
ReplyDeleteThe press is a medium for various parties to further their interests.
Insider trading is evident everywhere,just that is is more rampant in Malaysia.
Moreover, publishing such "rumours" in the press will jack up the share price, thus giving the seller more bargaining chips.
Dear Fesserie,
ReplyDeleteSo is this practise acceptable?
From what I can see, the regulatory authorities has not initiated any actions against the various prepetuators. Perharps everyone is making good $$ from it?
ReplyDeleteEver since Moola highlited this "according to sources" issue, I have paid attention on this unnamed sources on the international financial papers that I read regularly. No real surprise, even Wall Streets Journal and Financial Times do use this unnamed sources for imminent / possible M&As from time to time.
ReplyDeleteThe only publications that I have yet found any "unnamed source" is Economist, which is understandable since it's a weekly publication.
Talking about rumours, there's this conspiracy theory behind Bear Stern's collapse by Byran Burrough (the author of 'Barbarians at the Gate'), where claimed Bear Stern was literally killed by rumours. http://www.vanityfair.com/politics/features/2008/08/bear_stearns200808
Rumours are just part and parcel of the game.
Maybe some person with the relevant legal knowledge could correct me; but one only consitutes 'insider trading' if he actually use the information for profiteering; actual leaking in itself does not constitute any 'insider trading'