Penny plays make waves as blue chips stagnate
PENNY-STOCK fever gripped the local stock market yesterday, as CEFC International continued its gravity-defying run with a stunning 64 per cent gain.
This took its rise in a little over a week to almost 900 per cent, creating spillover rises for several other low-priced issues such as Oceanus, Foreland Fabrictech and Sino Construction.
The largest percentage gain for the day was reserved for China shoe-sole maker Qingmei, which rocketed up 2.6 cents or 325 per cent to 3.4 cents on a volume of 155.2 million.
Meanwhile, blue chips stagnated, possibly as attention was diverted to penny stocks. The Straits Times Index had an unremarkable session, drifting within a narrow band before ending 2.07 points weaker at 3,371.41.
The top 20 active stocks were all priced below 30 cents and the average unit value traded was 31 cents - a clear indication of where the action for the day lay.
"If CEFC, which is loss-making, can rise 10 times in a few weeks, then why not others like it?" asked a dealer. "Traders have had such a hard time this year, this is a chance for them to bang and bang hard."
CEFC was queried by the Singapore Exchange (SGX) early yesterday afternoon, while Qingmei was queried by SGX in the late afternoon. For CEFC, the exchange noted that it was the second query in a month.
When replying to SGX's first query on Monday, the company had drawn attention to an earlier announcement in which it said it was considering certain deals in China, which may or may not materialise. In its query yesterday, the exchange reminded CEFC that a holding announcement could be made.
Elsewhere, Asian markets advanced yesterday, with Tokyo boosted by a weaker yen and Shanghai's recovery continuing, but falling commodity prices fuelled fears about global growth.
With concerns easing about the Greek debt crisis and China's market rout, dealers are now focusing on when the United States Federal Reserve will raise interest rates as the US economy gets back on track.
Tokyo rose 0.93 per cent, or 191.05 points, to 20,841.97 - close to an 18-year high - and Sydney climbed for a sixth straight session, putting on 0.35 per cent, or 19.8 points, to 5,706.7. Seoul gained 0.50 per cent, or 10.31 points, to 2,083.62.
Shanghai closed up 0.64 per cent, or 25.56 points, at 4,017.67 - ending above the key 4,000-point barrier for the first time since July 1.
Hong Kong added 0.52 per cent, or 131.62 points, to 25,536.43.
Buying was also supported by another positive lead from Wall Street, where the Nasdaq ended on Monday at a record high for the third straight session, adding 0.17 per cent.
The Dow Jones Industrial Average gained 0.08 per cent and the S&P 500 finished 0.08 per cent higher, just short of an all-time high.
THE BUSINESS TIMES, AGENCE FRANCE-PRESSE