AirAsia Under Pressure As Accounting Questioned; Stock slumps 20% as accounting practices come under fire, adding to concerns about a weak ringgit.
June 16, 2015
It’s been a tough six months for AirAsia chief executive Tony Fernandes as he’s grappled with the tragic aftermath of the crash of flight 8501, which plunged into the Java Sea off Indonesia just after Christmas. Having worked hard to contain the damage to the reputation of the Malaysian airline which over the past decade forged a reputation as a pioneer of low cost airline travel across Asia, Fernandes now confronts a new challenge threatening the company’s reputation – questions about its accounting practices. Continue reading
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Here’s Why Ezra Holdings Limited and Noble Group Limited May Actually Deserve Their Shocking Price Declines
By Chong Ser Jing – June 15, 2015 | More on: 5DNES3N21^STI
Offshore support services provider Ezra Holdings Limited (SGX: 5DN) and commodities trader Noble Group Ltd (SGX: N21) have received lots of attention from market participants as a result of their stunning price declines. Over the past 12 months, Ezra’s shares have sunk by nearly 75% in price while Noble’s shares have lost half their value. It’s been a painful experience for investors in the companies, to say the least. To add insult to injury, the SPDR STI ETF (SGX: ES3) – an exchange-traded fund tracking Singapore’s market benchmark the Straits Times Index (SGX: ^STI) – has inched up by 1.2% over the same period.
The finger of blame
This disparity between the performance of the two shares and the broader market have resulted in some pointing the finger of blame at short-sellers as culprits for the price declines. At first glance, there are merits to the accusations. In an article published in the Straits Times today titled “The long, vice-like arm of short sellers”, renowned financial journalist Goh Eng Yeow wrote that Ezra and Noble are “two of the most heavily shorted firms on the local bourse.” Goh also gave some good statistics on how the percentage of shares out on loan for both Ezra and Noble, “presumably to short-sellers,” had grown markedly over the past year: Ezra’s shares out on loan had grown from 2.9% in July to 11.2% currently. As for Noble, the selfsame figure had ballooned from near-zero to nearly 6% over the same period.
But, I’d like to suggest that it may not be the short-sellers who are causing the price declines. Sure, the short-sellers may have been catalysts for the painful drops, but their actions are a possible manifestation of a bigger issue: Both Noble and Ezra’s business performance have been dreadful over the past six years since 2009. Continue reading