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SGX RegCo urges caution when dealing in Sevak shares, citing unusual price movements

SINGAPORE Exchange Regulation (SGX RegCo) on Thursday urged investors and potential investors to exercise caution when trading shares of IT solutions company Sevak Limited.

In an announcement, it noted that the share price of Sevak had climbed steadily from S$2.51 on Sept 17, 2018 to S$4.05 on Oct 19, 2018, a meteoric rise of S$1.54 or 61 per cent, despite a general decline in the broad market.

Since Sept 17, 2018, Sevak's market capitalisation has increased by about S$14.8 million to reach S$44.4 million on Jan 25, 2019. On Jan 24, 2019, Sevak announced that it had submitted an application to SGX-ST to exit the watch-list. SGX RegCo said that it is reviewing the trades in Sevak shares and will "take the necessary actions".

Of particular suspicion is that between Oct 4, 2018 and Oct 16, 2018 despite the fall of  the Straits Times Index (STI) by 233.09 points or 7.13 per cent, Sevak's share price rose from S$3.30 to S$3.80, an increase of S$0.50 or 15 per cent.

On Oct 11, 2018, SGX RegCo issued a trading query to Sevak on unusual price movements in its shares that day. SGX RegCo observed that despite the STI falling as much as 96.28 points or 3.07 per cent, Sevak's share price had risen by S$0.08 or 2.24 per cent.

Sevak responded that apart from its previous announcements regarding its share buy-backs from the market, it was not aware of any reasons that could explain the unusual price movements.

SGX RegCo had noted that during the 61 per cent price rise between Sept 17 and Oct 19, 2018, Sevak's share buy-back account had contributed more than 70 per cent of the market traded volume for the stock.

From Oct 22, 2018 to Jan 25, 2019, after Sevak ceased its share buy-back activities, a group of clients was observed to account for more than 70 per cent of the buy volume of Sevak shares.

"These clients appear to be connected to one another. In particular, between Dec 14, 2018 and Jan 25, 2019, the closing price of Sevak shares remained steady around S$3.80 when the general market experienced volatility," SGX Regco said.

Shares of Sevak continued their upclimb on Thursday, adding seven Singapore cents or 1.9 per cent to finish at S$3.77.