Golden Agri share price plunged to record low

Sign up & unlock articles! Is this the end of the road for Golden Agri share price? The only predictability about Indonesian palm oil plantation company is its unpredictability. In December 2019, many analysts (including myself) predicted that Golden Agri share price would be doomed after the stock was removed from the prestigious Straits Times Index (STI). But the company ended FY2019 on a high note after delivering a surprising result which saw the company clocking USD194 million of net profit.

Golden Agri share price to lose shine after STI exit?

Golden Agri share price in false dawn?

Golden Agri share price

Entering FY2020, Golden Agri share price plunged to a low of $0.13 on 23 March 2020 due to the devastating fallout from COVID-19. Since then, Golden Agri share price had not been able to shake the blues. For the past four months, the stock had been languishing around the $0.13 to $0.15 price range. Make no mistake, no winter lasts forever. The best chance of making money from stock market is to enter during crisis time. But will Golden Agri share price turn out to be a falling knife?

Perhaps, the disappointing 1st quarter business update played a part in the bearish form of Golden Agri share price. Revenue increased 2% to USD1.66 billion but net loss amounted to $95 million. But apart from the poor business result, the sluggish form of Golden Agri share price might also be attributed to the activities of short sellers.

Since 2 December 2019, SGX has revised the fixed rates for its Securities Borrowing and Lending (SBL) programme. The borrowing fee rate had plummeted from 6% to 0.5% for index stocks and 4% for the rest of the securities. However, the borrowing fee rate for GAR is only 0.25%! The extremely low borrowing rate fee makes Golden Agri share price very vulnerable to short-selling attacks.

Furthermore, 39 million Golden Agri shares had been loaned to the SBL pool. This is a large amount, allowing short-sellers to borrow and short the stock. Given that GAR had already exited STI, I find it strange that the borrowing rate remains so low.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Golden Agri before. Whether Golden Agri share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

Golden Agri share price may be ambushed?

COVID-19 had ravaged the entire global market. Of course Golden Agri share price was not [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: July 14, 2020 — 9:06 am

2 Comments

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  1. Can review on SPH this counter also after kicked out of STI…
    Tks

  2. Dear Mr Chan,

    Noted, will do a research on SPH shares. Please stay tune.

    Regards,
    Gerald
    https://sgwealthbuilder.com

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