China Gaoxian became the latest S-chips to throw investors into the fray following its halting of shares. The purpose of the suspension was quoted as ‘investigating the matters prompting SGX’s queries’ which was in relation to the unusual trading activities of its shares on 21 Mar-11. Investors are nervously awaiting news as speculation is rife on the underlying reason, with fears stemming from earlier accounting irregularities at some China-based firms listed in Singapore. Notably, earlier this month, SGX had queried its unaudited FY10 financial results to seek clarity on the significant decrease in trade and other receivables as well as the rise in bank loans despite a significant jump in cash balances. In response, the company explained that cash sales made up a larger proportion of total sales in FY10 than in the preceding year.
Significance: It would be surprising if the forthcoming disclosure throws up any accounting issues as the company has recently gone through another round of scrutiny by the Korean Exchange in its dual-listing undertaking. However, should the news turn out to be negative, it would serve as a wake-up call for shareholders that they should not take dual-listing as a guarantee of a company’s health.
Ref : SGX Nifty
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