Saturday, 31 March 2012

Metronic Global: syndicates and receivables

Article in Business Times: "Transparency will benefit all market players" by Francis Fernandez.

"DO we have syndicates operating in the local stock market? The answer is probably "Yes". Do we have syndicates operating in the major global equity markets? The answer to that is also probably "Yes".

However, can we prove our suspicions with facts, the answer to that is most likely "NO".

Does the financial markets need market makers and are all market makers syndicates? The answer to that question is probably tangled with a bit of white, black and a whole lot of grey".

"Do we have market makers here in Malaysia? The answer to that officially is a resounding "NO", but the market makers, nevertheless, exist unofficially at least.

Hence recent reports that Bursa Malaysia gave verbal instructions to brokerages to stop their proprietary day traders (PDTs) from trading in Metronic Global Bhd and Ariantec Global Bhd are disturbing.

What Bursa Malaysia did is good, but why the reports on the market regulator engaging with the brokers are disturbing is because, when Bursa Malaysia gives out instructions on some particular securities, it must provide the information to all investors at the same time.

I do believe that is why it has a website. If all investors have the same information, then they will be able to make an informed decision based on facts, and not on reports that can later be denied or confirmed.

Most investors do not read the same newspapers, hence some will gain from those reports, while other will lose out".

I wrote about Metronic Global in the past, it is a company with quite a few issues, some dating from a long time ago. This is their statement from June 30, 2011 about RM 44.5 million outstanding receivables:
"In relation to the related party receivables due from the Main Contractor Related Party, subject to the finalization of the claim certification by JKR and the subsequent disbursement of payment from the Ministry of Finance, the Company expects the outstanding receivables to be fully recovered through progressive disbursements to be made by the Government of Malaysia not later than 31 December 2011."

But according to its most recent statement, nothing has changed:

Its share price made a rollercoaster ride with the entry of a new investor, Datuk Raymond Chan Boon Siew, buying 33 million shares (5.2%):

Volume is very high, reaching 845 million on March 21, 2012. Remarkable, since the total number of shares is only 635 million.
We have to wait and see how this story will evolve.


  1. Well... Do we need to look at the financial statements when the stocks are linked to Raymond Chan or Najib's son?

  2. My opinion:

    In the short term: no

    In the long run: yes (since all companies will hover around their intrinsic value)

    The receivables is a very large amount that has been a thorn in the balance sheet for a very long time; and unfortunately, it is Related Party.

  3. Hi The Edge Financial Weekly just had an interview with the Malaysia Warren Buffett (Mr. Raymond Chan). He said he is buying penny stocks with intrinsic value higher than market price and the sudden surge of volume and market price will spike the interest of retail investor. Of course the stock market need retail investor to move on but with such speculation it will make Bursa looks like a big casion. I do agree the sudden surge in the volume and market price of penny stocks will attract the interest of retail investors but this will lure them to speculate. As we all are well aware of, speculation is extremely risky. In the long run, these new comers that lost money will feel that Bursa is a big casino and they might tell the next generation to stay away from Bursa. Previously I was educated that share market is a big casino, anyone that enter it is a gambler. I believe in the long run the interest of Bursa and investor will be hurt by Raymond's activities. I really hope justice will be done on Raymond.

  4. Hi, I fully agree with you, I have read the interview and it did not make a good impression on me.

  5. Hi, i don't agree with these statements. Bursa sure has the responsibility to curb intensive speculation but within the legal framework. Speculation exists everywhere, even in the DJIA, S&P or EU markets. After all, this is a free market and thus, RAYMOND should never be made a scapegoat. Speculators are everywhere!

    In conclusion, a responsible investor should conduct due diligence before deciding on their intended investments. In short, believe only in fundamentals.

    Finally, the bourse (as in every democratic country) is the lifeline of the economy. This is the place where one can really increase their investment knowledge and grow their investment portfolio and income. A casino is for punters without fundamentals and one can ONLY depend on luck. Statistically, the banker will always gain against the punter.

    May we all gain prosperity and success together as a nation. Long live "Malaysia"!!!