UPDATE 1-Blumont, Asiasons shares resume slide as SGX lifts suspensions
* Blumont, Asiasons shares extend steep slide on Monday
* Sentiment for small-cap stocks hit by the trading halts
* Market puzzled by temporary nature of SGX share suspension
(Rewrites throughout with details)
SINGAPORE, Oct 7 (Reuters) - Two Singapore-listed companies resumed their steep decline on Monday as trading halts were lifted - suspensions which have raised more questions than answers about the stocks as well as how the country's exchange regulates sudden price moves.
Shares in Blumont Group Ltd, a diversified holding company, tumbled as much as 87 percent, while investment firm Asiasons Capital Ltd dropped more than 90 percent.
A third company hit by the suspensions imposed on Friday, gold miner LionGold Corp Ltd, remained untraded after asking for the halt to continue, pending an announcement.
The three companies had seen strong run-ups in their stocks this year before the Singapore Exchange Ltd (SGX) suspended trading. SGX said the market may not be fully informed of the companies' affairs after a plunge in their share prices on Friday.
SGX-directed trading suspensions are fairly rare. While some traders have said the bourse appears to be cracking down on speculative trading, others question its handling of the matter.
"The trading suspension was quite drastic and it created panic last week. It was a sentiment killer. It not only affected the three stocks, but also a slew of small and mid caps," said Roger Tan, chief executive of Voyage Research in Singapore.
"The suspension should have stayed for a longer time so the companies can make clarifications on a more fundamental level. Since you already suspended it, why not wait a while more?"
Both Blumont and Asiasons said the decline in their shares and the trading suspensions on Friday seem to have been precipitated by misunderstandings.
In an exchange filing on Friday, Asiasons said it had been informed that there were "malicious market rumours that a team from the Monetary Authority of Singapore has been sent to the company's office to carry out investigations. The company confirms that such market rumours are false."
The head of Blumont's copper unit said in an email to Reuters that the plunge in the company's shares appeared to have been caused by short-selling, and that the slump had nothing to do with the fundamental value of the Blumont Group portfolio.
SGX said on Sunday it would lift the trading suspensions, but shares in the three companies would be declared "designated securities," meaning investors cannot short-sell them and purchases must be paid for upfront with cash.
The exchange said it imposes such conditions when it believes there may have been market manipulation of the security, excessive speculation or if it is otherwise in the market's interest to do so.
Other shares to have suffered in the wake of the suspensions include Innopac Holdings Ltd, which lost as much as 42 percent in early Monday trade, and ISR Capital which dropped as much as 47 percent.
Some of the companies are linked to each other. Asiasons is LionGold's biggest shareholder with an 8.7 percent stake as of Aug. 30, according to Thomson Reuters data.
Asiasons is also the biggest shareholder in ISR, while LionGold has a stake in Innopac. Blumont and LionGold have a non-executive independent director in common.
Blumont's share price plunge and suspension caused it to call off a proposed S$146 million ($117.19 million) takeover of Australian-listed coal explorer Cokal - an agreement that it had just announced on Friday.
Blumont's copper unit said, however, that there was no change to its plan to invest $108 million in Botswana copper miner Discovery Metals.
LionGold Corp is in advanced discussions to buy small Latin American gold miner IRL, IRL confirmed on Friday.
Blumont's stock was trading as low as S$0.115 in early Monday trade. Asiasons's low was at S$0.085. ($1 = 1.2458 Singapore dollars)
(Additional reporting by Anshuman Daga in SINGAPORE and Sonali Paul in MELBOURNE; Writing by Edwina Gibbs; Editing by Ryan Woo)