Last Friday, Singapore Exchange (SGX) suspended 3 counters which are Blumont, Asiasons and Liongold. When it was allow to resume its trading on Monday, the price of the shares suffered a nosedived. This has greatly hurt many institutional as well as retail players. All in all, these trio shed a combined $8.57billion in market capitalisation value.
Many people questioned the falling of these shares, but I on the other hand wondered how come nobody doubt or even bothered to find out why they were rising in the first place? Is kind of scary to see individuals joined in this bull run blindly without having a reason of their own to put in their hard-earned saving into these counters.
Let’s take Blumont for an example:
Blumont Group Limited is an investment holding company, provides contract sterilization and polymerization services for food packaging, medical devices, cosmetic raw materials, and consumer products. The company also develops properties for sale; and holds properties for rental and related income. It operates in Singapore, Malaysia, Indonesia, and the United States. The company was formerly known as Adroit Innovations Limited and changed its name to Blumont Group Ltd. in April 2011. Blumont Group Ltd. is based in Singapore.
As you can see from below, the share price has risen from a mere $0.20 to a peak of $2.60 within a short period of 10 months. In addition, a strong spike was seen on 23 Sept where within a week the stock experience a 2-fold increase.
I hope this hard learned lesson can educate us investor to always look for fundamental reason to invest rather than just speculating the market. If not a non-substainable growth is bound to collapse hard when situation is reversed.