Analysis of UMA's

Kenanga research wrote an article about Guocoland (Malaysia) Bhd, titled "Unlocking RNAV".

An interesting observation in the fourth paragraph:

That means that an UMA (Unusual Market Activity query) does have a clear effect.

UMA's were seen as having not much of a bite, but things changed when Can-One was reprimanded and seven directors were fined 350K, as blogged about before.

Heated questioning at Bursa's AGM

Article on The Edge website:

Bursa AGM: Shareholders question Bursa’s efficiency at long heated meeting

Some snippets:

Bursa Malaysia Bhd’s annual general meeting (AGM) today was longer than expected, with shareholders incessantly raising questions on the operational efficiency of the stock exchange and voicing dissatisfaction on various issues. The meeting, punctuated by some heated questionings, began at 10 am and ended at 1.20 pm today. During the three-hour long AGM, Bursa Chairman and Non-Executive Director Tun Mohamed Dzaiddin bin Haji Abdullah was said to have cut short some issues raised by shareholders, which prompted some infuriated shareholders to storm out. “How can the chairman deny us the opportunity to raise important issues?” a shareholder complained, while talking to theedgemalaysia.com.


The Board of Directors has to answer questions of the shareholders during an AGM, the only time they can ask questions.

From the above it looks like the journalist of The Edge Malaysia was not allowed in the AGM, why not? I think it should be a completely common practice to allow journalists in, a healthy dose of transparency should do no harm, I would think.

One way to solve this problem is that an organisation like MSWG buys small amounts of shares in all listed companies under several different subsidiaries, and let some journalists (beside their own representative(s) of course) be a proxy for those subsidiaries.


The management of the stock exchange – including CEO Datuk Tajuddin Atan – declined to talk to reporters after the annual general meeting (AGM). But a shareholder told theedgemalaysia.com that many shareholders had raised pointed questions and made sharp comments at the AGM. One was that ‘Bursa is not quick enough in response to unusual market activity (UMA)’. “For instance, we see some shares surging all of a sudden without any apparent reason. Is there insider trading involved?” the shareholder said. “We also want to know what Bursa will do and how to curb such activity,” the shareholder added, noting Bursa’s response was that it would investigate any ‘unhealthy activity’. Another shareholder piped in: “The trading practices are not fair to investors. We want it to be simpler and fairer for all investors.” Shareholders were also unhappy over ‘high brokerage fee’ to buy, sell and transfer shares. The minimum brokerage fee to buy or sell shares is RM40, while to transfer shares it cost RM10. “It is painful for retail investors like us when we trade in small volume,” a shareholder said.


I agree that RM 40 minimum brokerage fee is very high when the amount of shares traded is small. The minimum brokerage should be much lower, otherwise the whole idea behind having trading lots of only 100 shares does not make sense.

The above questions do again put the spotlight on Bursa being a monopoly, an exchange, a regulator and a listed company. Too many hats, if one would ask me.

Can-One reprimanded, seven directors fined RM 350K

Bursa Malaysia issued the following Media Release:

"Bursa Malaysia Securities publicly reprimands Can-One Berhad and fines seven directors a total of RM350,000"

The facts are rather clear:

The share of Can-One suddenly took off in high volume:

On January 5, 2012 Bursa issued an "UMA" (Unusual Market Activity) query. This is pretty standard when the share price of a company changes a lot.

Can-One replied the same day:

"1. There is no corporate development relating to Canone Group’s business and affairs that has not been previously announced that may account for the unusual market activity including those in the stage of negotiation/discussion.

 

2. We are not aware of any rumour or report concerning the business and affairs of Canone Group that may account for the unusual market activity.

 

3. We are not aware of any other possible explanation to account for the unusual market activity."

One day later, on January 6, 2012 however, Can-One issued the following announcement:

"The Board of Directors of Canone is pleased to announce that the Company has on 6 January 2012 been advised by its solicitors that the Federal Court had on 5 January 2012 allowed the Liquidators' Appeals, including the Liquidators' Appeal to proceed with the completion of the sale of 146,131,500 ordinary shares of RM0.25 each held by KJ Holdings in Kian Joo at RM1.65 per share for an aggregate consideration of RM241,116,975.00 to CISB."

Bursa Malaysia was probably not too pleased with the two statements which seem to contradict each other, and concluded:

"CANONE’s announcement dated 5 January 2012 (issued at 7.20 p.m.) was inaccurate, not factual and hence, in contravention of its disclosure obligation under the Listing Requirements.

Bursa reprimanded the company and reprimanded and fined the seven directors each RM 50,000.

Good action by Bursa, also within a reasonable time limit. Too often I noticed the rather "automatic" reply "we are not aware of any rumour/report/explanation" by companies on an UMA query, so a decisive action will hopefully deter future breaches of the rules.

Trading in the share should have been suspended by the company the moment the Federal Court made its decision, giving all shareholders a reasonable time (say one day) to digest the information.

For me just one question remains: why did the directors breach the rules? Just an honest/lazy mistake, a case of miscommunication, or was something else going on, did (any of) the directors benefit from their action?