Noble Group may see some light at the end of a months-long tunnel of attacks from critics, with commodity trader's share price surge following an independent report on its accounting suggesting a shift in market sentiment.
"Regaining investor confidence is a long-drawn process, but we think Noble has made a good start here," Abhijit Attavar, an analyst at Jefferies, said in a note Monday. "We are close to an inflection point in investor sentiment for the shares."
The commodity trader's stock jumped as much as 11.2 percent to as high as 0.645 Singapore cents in early trade, before retracing to trade up around 4.3 percent around midday; the overall market was down, with the Straits Times Index shedding 0.8 percent. Noble's stock is still down around 50 percent since February, when then-anonymous Iceberg Research published the first of a series of negative reports, with the first headlined "Noble Group, a repeat of Enron."
Tuesday's share gains come despite the company also reporting earnings that disappointed analysts, with second-quarter net profit falling 5 percent on-year, weighed by weak results in the metals unit.
But traders are focusing on two key news points, Nicholas Teo, market analyst at CMC Markets, said in a note Tuesday, citing the release of the independent PricewaterhouseCoopers (PWC) review, which found Noble's accounting was in line with international standards, and media reports that the company had hired dealmaker Michael Klein to review options, such as raising secure financing or selling a stake in the company.
"While these two developments are anything but confirmed, just the fact that these developments are in the 'background' may bring about some degree of short covering," Teo said.
It isn't clear how well the PwC report has assuaged critics concerns over the company's accounting practices.