Short Position - Strange happenings

Maybank Bank Simpanan

Strange happenings

When Tan Sri Lee Kim Yew emerged as a substantial shareholder in nondescript Metronic Global Bhd in August last year, it raised eyebrows.

Why would Lee, whose main interest is in property development, acquire a substantial stake in an engineering company that specialises in integration of intelligent building management and security systems.

Lee’s entry with a 20% stake in August last year coincided with the exit of Ooi Cheng Siem from Metronic Global.

Ooi who used to hold 11.9% in Metronic Global, was also the major shareholder in ATTA Global Bhd and Heng Huat Resources Bhd. Ooi had to relinquish his position as executive chairman in Atta Global and Heng Huat Resources to assist police investigations into a drug case involving the former.

Lee is better known for his property development projects near Kajang that is held under his flagship company Country Heights Holdings Bhd (CHHB). But in the last decade, CHHB has been rather low profile with no major property launches.

CHHB’s existence is anchored on a lavish hotel and golf course that was once touted to be the main attraction for the property development that attracted the rich and famous.

But over the years, it lost its lustre as a premier developer as other hotels came up into the market and golf courses. As for CHHB, there were no corporate developments although it has been seen as a good privatisation candidate for holding undervalued assets.

In Metronic Global, Lee raised his stake to 29% in August last year. Apart from that, there has not been any major corporate activity in loss-making Metronic Global. This week, Lee reduced his stake on September 21 and was no longer a substantial shareholder two days later.

Sanichi Bhd and MNC Wireless Bhd emerged as substantial shareholders in Metronic Global.

What is the game plan of Sanichi and MNC Wireless in Metronic Global is anyone’s guess?

But one wonders why two listed companies would want to take minority stakes in another listed company that has a market capitalisation of only RM106mil?

Stock manipulation via social media

Hong Kong’s Securities and Futures Commission (SFC) said this week that of all the stock manipulation schemes they are investigating, 20% are being perpetrated via social media. That should not come as a surprise.

As highlighted in this column before, such schemes are rampant in Malaysia too and have seen a ramp up in recent months, targeting the hoards of retail investors who have flocked to trade on Bursa Malaysia stocks.

The Reuters report on the Hong Kong situation explained the stock manipulation via social media as instances where fraudsters typically purchase a significant portion of shares in a small company with low liquidity, driving up the price.

They then use social media platforms like Facebook, WhatsApp and WeChat to spread favourable, normally false news about the company, sometimes posing as investment experts, drawing more buyers in and allowing the fraudsters to offload their shares.

Remaining shares are then dumped, causing the price to collapse. the report said. So what’s the situation in Malaysia? The Securities Commission does not have a figure yet on how many percent of its investigations of stock manipulation involve the usage of social media. But the SC said that it has seen a marked increase of unlawful activities in the usage of social media, in particular in clone firm scams. Some of these involve scammers impersonating legitimate intermediaries using Whatsapp or Facebook.

The regulator says they also noticed a rise in unauthorised online trading platforms that offer various investment products including cryptocurrencies, as well as offering investment advice by unlicensed people through social media.

To curb this, the regulator has taken steps to increase surveillance and supervisory actions, while ramping up efforts in investor education and awareness.

In addition, the SC has also established a special task force to accelerate the detection, investigation and initiation of enforcement action against any perpetrators.

The SC has also listed on its website a list of unauthorised or unlicensed platforms, companies and individuals who offer investment advice illegally.

Banks in a Catch 22?

Banks need to start lending again if the Malaysian economy is to start recovering, post Covid-19.

That’s the message sent out by bankers this week as the end of the blanket moratorium period looms.

But equally important is that borrowers will also need to start making good on their current bank loans after the six-month reprieve given by the government in the wake of the Covid-19 pandemic ends next week.

How can they borrow more if they can’t pay their present loans? So far, reports indicate that banks have managed to speak to some 1.4 million borrowers and more than 380,000 of these have said that they need loan repayment assistance, post Sept 30.

That’s close to one third of borrowers. Sure, there will be other businesses and individuals that banks can depend on to lend funds to.

But the current weak economic environment is not helping and everyone is holding on to their purse strings.

It remains to be seen how many borrowers will not be able to pay up for now. Bankers have urged everyone who are facing difficulties to come to the banks and talk to them. So where do banks go from here? And how long before it’s back to business as usual? Banking stocks have suffered much in recent months, a reflection of poor financial results and a less than rosy immediate future as people remain cautious on borrowing money, one major way in which banks make their profits.

Within banking circles, cost-cutting, cuts in bonuses and a freeze in hiring have become buzzwords. Granted, banks are not the only ones going through tough times.

But they remain an important benchmark of things economically. Suffice to say, moving forward, lenders will have a tough task in balancing their growth aspirations and helping out their borrowers.

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