By Nicholas Bryant
Friday 14th July 2000
|Text too small?|
|BILL FOSTER: Market surveillance panel accepted E-Phone's explanation|
E-Phone's share price, hit hard by April's tech-stock correction, surged in heavy trading on Tuesday from 25c to 33c, prompting the NZSE surveillance panel to ask what was going on.
E-Phone gave the expected reply; that it knew of no reason for the increase and there was no transaction concluded that would result in the increase in the price of the company's shares.
But the statement continued: "The company is in the process of concluding a commercial arrangement, which before any public statement requires the consent of other participants.
"It is anticipated that an announcement in relation to this arrangement will be made public within the next few days."
New Zealand Stock Exchange managing director Bill Foster said the surveillance panel had decided to accept E-Phone's explanation and let it keep trading.
But market watchers found the statement curious.
"That's almost guaranteed to increase speculation. A market announcement is meant to inform the market, not titillate and that's what that does," one Australian broker said.
A day later E-Phone announced it had formed a strategic alliance with NCR and Hewlett-Packard to develop its public internet terminal software.
Some local investors were not impressed with how E-Phone had handled the announcement.
"In the absence of an adequate response to these questions it's easy to see why 80% of investors perceive insider trading to be a problem in New Zealand," one investor wrote to Sharechat's online forum, referring to a National Business Review-Compaq poll which found a high level of concern about insider trading.
Sharechat director Ben Dutton said E-Phone's share price movement appeared to show people possessed valuable information that was not available in the public domain.
"The NZSE and Securities Commission should vigorously pursue who is behind unexplained price surges like this. Only with direct and swift action from these two bodies will the investing public regain faith in our capital markets," Mr Dutton said.
In one 24-hour period investors in E-Phone would have made a 38% return on their shares.
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