Penny stock collapse sucks life out of market

UNTIL a few weeks ago, penny stocks appeared to have a life of their own, one almost wholly divorced from blue chips. The Straits Times Index could trade in the red and sentiment could be weak because of overseas worries but low-priced stocks could easily double, treble and in some cases, rise more than 10 times in a relatively short space of time, in some cases accompanied by eye-catching corporate announcements but in many others with no fundamental backing.

All of this has now come to a screeching halt following action by the Singapore Exchange (SGX) and broking houses, the former when it slapped designations on three speculatives and suspended trading for two weeks, the latter because of trading curbs on not just the same three but also dozens of others.

This week was probably the most painful for those caught in the pennies, a situation made worse by the sudden crashes in SkyOne and Tritech Group on Monday which brought on worries that SGX would intervene.