Take Swee Hong rally with caution

INVESTORS should treat construction company Swee Hong's recent share surge with a healthy dose of scepticism.

Although the spike has taken the stock to where it was about four months ago, the lack of a visible fundamental catalyst to underpin the recovery raises questions about the quality of the price jump. Investors might be better served looking at less risky alternatives within the sector.

Swee Hong shares made their listing debut on the Singapore Exchange (SGX) mainboard in May 2012 and had traded between 25 and 32 cents for most of that time. But the Oct 4 collapse last year of a handful of SGX stocks - Asiasons Capital, Blumont Group, LionGold Corp, Innopac Holdings, ISR Capital and ISDN Holdings - triggered a massive selloff among smaller counters that hit Swee Hong as well.