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Police report made on jump in transport shares

Wednesday, May 28, 2014 - 06:00

[SINGAPORE] The sharp run-up in the share prices of transport operators, ahead of changes announced recently to the public bus framework, has led to a police report calling for investigations into potential insider trading.

Blogger and activist Ravi Philemon made a police report last Saturday, requesting that the Monetary Authority of Singapore (MAS), the Commercial Affairs Department and the Singapore Police Force investigate whether any shareholders in SMRT and ComfortDelGro had engaged in insider trading ahead of the announcement.

In his report, he pointed to a news article which said that the land transport operators' stocks had risen substantially on May 20, a day before the government unveiled sweeping changes to the public bus system.

The Business Times understands that the police are looking at his report.

In response to queries from BT, a police spokesman said: "It is inappropriate to comment on investigations, if any."

An MAS spokesman said it does not comment on ongoing police investigations.

Transport operators SMRT and Comfort did not respond to queries from BT yesterday.

On May 20, all three transport stocks made significant gains ahead of the restructuring announcement, which some analysts described as a positive move for the companies.

SMRT rose 14.5 cents to hit $1.475; ComfortDelGro was up seven cents to $2.38 and SBS climbed 7.5 cents to $1.40.

But SMRT's counter also saw a strong pick-up last month, jumping by as much as 21 per cent to a high of $1.24 in intraday trading on April 24 and prompting a trading-activity query from the Singapore Exchange. SMRT had said then that it was not aware of any reasons for the unusual activity.

Yesterday, ComfortDelGro gained four cents to close at $2.35, while its unit SBS closed at $1.58, down half a cent.

Shares in SMRT lost 1.5 cents to close at $1.45.

In a shake-up which overhauls Singapore's bus industry, the Land Transport Authority (LTA) announced last Wednesday that it will do away with the existing privatised model, and make the transition to a government-contracting model from the second half of this year.

Currently, bus operators SBS and SMRT own their buses and keep all fare revenue.

Under the new system, the government will own the buses and the bus infrastructure, and will contract out bus routes in 12 packages through a tender process to both local and foreign players. Operators will be paid a fee to run and maintain the services, while the government retains all fare revenue.

The idea is to introduce greater competition, boost service standards - new, higher standards will be built into the contracts - and create a more flexible system which can better address changing commuter needs.