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Traders stay cautious over battered penny stocks
[SINGAPORE] The Republic's most devastated penny counters of the past month found some relief on Friday, but traders cautioned that those stocks are not out of the woods yet.
"The market may have said, this is it, this is enough, everything's priced in already, but mind you, most of these are still restricted at most of the broking houses," one trader said.
Sky One Holdings, a logistics company seeking to move into coal mining via a reverse takeover, led the way with a 43 per cent jump on Friday to close at 14.3 cents. The stock had fallen 80 per cent last Monday to 9.2 cents from 47 cents, but found a bounce as the week ended after Singapore Exchange (SGX) said that it had found "no threat to fair, orderly and transparent trading" in the stock's sharp fall.
"You remember night shooting (in the military)?" the trader said. "It's at night, all black, can't see a thing, people are waiting for the command, but when the tracer (bullet) comes, bang! Follow the tracer! I don't know if Sky One boosted the whole thing, but it probably did."
Asiasons Capital, an investment firm, also rose 15 per cent on Friday for an 18.8-cent close. Blumont Group, a product sterilisation business moving into mining, gained 9 per cent to close at 12.7 cents. Gold miner LionGold Corp entered the weekend at 22.5 cents, up by 12.5 per cent.
"Some clients, the aggressive ones, some bargain hunters are definitely seizing the moment," the trader said.
All three companies had been suspended by SGX on Oct 4 before being allowed to trade under restrictions, which were lifted on Oct 21. Regulators have said they are reviewing the circumstances surrounding the trading of those three stocks.
But Friday's rally was hardly a runaway vote of confidence. To begin with, all the stocks were coming off from lower bases, so each tick higher tends to appear more significant on a percentage basis.
It can also be risky to extrapolate from one-day movements into a trend.
"Next week will be a good gauge of where we stand," the trader said.