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Hot stock: Wilmar slides 8.6% on heavy sell-off after China unit's market debut

Yihai Kerry Arawana - YKA - cooking oil - Bloomberg.jpg
YKA's cooking oil with a Golden Dragon Fish logo has been a staple of Chinese kitchens for decades. It began trading in Shenzhen on Thursday.

WILMAR International's share price took a dive as high volumes changed hands on Thursday - also the first day of trading for its newly listed Chinese subsidiary - prompting a query from the Singapore bourse operator.

Within the first 20 minutes of trading, the mainboard-listed stock gained 1.7 per cent or S$0.08 to hit S$4.74. But it quickly tumbled to a low of S$4.26 at around 10.13am, dropping 8.6 per cent or S$0.04 from Wednesday's close.

It regained some ground to trade at S$4.41 by the midday break, down S$0.25 or 5.4 per cent.

The counter clocked the second-heaviest volume on the Singapore bourse, with about 33.8 million shares changing hands, and was the most actively traded by value.

More than 200 large trades - each with a value exceeding S$150,000 - were done in the morning session, according to Shareinvestor data. No married deals were recorded.

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Thursday also marked the start of trading of shares in Yihai Kerry Arawana Holdings (YKA), the agri-food giant's 89.99 per cent-owned subsidiary which joined the tech-heavy ChiNext board of the Shenzhen Stock Exchange.

YKA shares made a gleaming debut at 9.30am at 48.96 yuan, almost double its initial public offering (IPO) issue price of 25.7 yuan.

But they then lost some steam, falling to 42.93 yuan by the 11.30am trading break. That's still 67 per cent higher than the IPO price, but down 12.3 per cent from the opening price.

Over on the Singapore Exchange (SGX), at around 11am, the bourse operator flagged the "unusual price movements" in Wilmar's stock. The company responded an hour later that the increased trading volume in its shares "may be attributable" to YKA's commencement of trading.

YKA is a wholesaler and distributor of food products such as small package edible oil, rice and flour. Its namesake cooking oil with a Golden Dragon Fish logo has been a staple of Chinese kitchens for decades.

Its long-awaited listing had raised about 13.93 billion yuan (S$2.81 billion) after the close of applications last month, making it the largest IPO in Shenzhen, according to Bloomberg. The proceeds will be used for 19 food production projects in China.

The IPO shares were heavily oversubscribed - by 600.5 times for offline investors, raising 5.82 billion yuan, and by about 1,750 times for online retail investors, raising 3.9 billion yuan. Bloomberg noted that the IPO appealed to the mainland's individual retailers with a promise to share profits with the Chinese people and contribute to the economy of its homeland.

Strategic investors, including Singapore sovereign wealth fund GIC, accounted for 4.18 billion yuan, or 30 per cent of the IPO shares.

SGX's letter on Thursday is its second query issued to Wilmar in the past four months. In June, the agri-food group's shares surged amid active trading, which prompted the bourse operator's query. Wilmar subsequently announced that YKA had submitted an updated IPO prospectus.

On Sept 24, Wilmar's shares again saw heavy trading, after the Singapore-listed company announced YKA's IPO price.

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