Share price plunges as SGX issues Noble a warning

SINGAPORE — Noble Group plunged to its biggest monthly drop in 16 years after the Singapore bourse issued a warning on the firm’s shares amid a slump in commodity prices.

The trader sank 12.5 per cent to 45.5 Singapore cents yesterday, its lowest close since October 2008.

The shares were down 39 per cent in July, after falling each month since December, as a group calling itself Iceberg Research published criticism of the firm’s accounting. Noble has rejected the criticism and hired PricewaterhouseCoopers to review its practices, but that has failed to stop its shares from losing nearly two-thirds of their value since mid-February.

A 12 per cent drop on Thursday prompted the Singapore Exchange to query

Noble on the trading activity and issue a “trade with caution” note. The bourse said the stock has seen three instances of “unusual trading activities” in the past six months.

Noble’s slump weighed on the benchmark Straits Times Index, which closed down 1.4 per cent yesterday. Noble has bought back its stock at least 11 times since last month and paid S$131.1 million for the purchases, building up a 2.8 per cent stake.

“The share buybacks so far have been relatively limited, so we don’t expect immediate impact on the company’s liquidity or financial leverage,” said Ms Cindy Huang, an analyst with credit-rating agency Standard & Poor’s. Noble’s stock declines do not in themselves impact the trading company’s credit position, Ms Huang said.

“The larger issue would be if confidence is affected or lenders’ sentiment is significantly affected,” she said.

Investors have been monitoring the short interest on Noble’s stock. The percentage of outstanding shares on loan had increased to 12.01 per cent on July 29, from 0.1 per cent in mid-February before Iceberg issued the first of its three reports, data from London-based financial information services firm Markit shows.

“The talk is that if the short interest hits 10 per cent, it will be a tipping point for sentiment,” said a Singapore-based analyst who declined to be identified. The short interest coincides with a period where Noble is not allowed to buy back shares.

Singapore forbids share buybacks in the two weeks before a company reports quarterly results. Noble’s earnings are due on August 13. Agencies