Guoco's share price a loud, clear message

THE timing of important developments or announcements at Guoco Group is becoming increasingly easy to predict, even for the novice investor.

There seems to be a close correlation between runs in the banking group's share price and material changes to the group's financial circumstances.

For the novice investor, the way to get in before the latest developments are made public is just by watching for unusual share price movements and trading volumes.

This is not the first time Business Post has reviewed the trading of Guoco Group shares.

The last occasion was the anomalous trading that took place between July 10 and July 23, when it was officially announced that the group was going to take over the Overseas Trust Bank.

Yesterday, the stock rose four per cent while the market fell 0.7 per cent.

In two days' trading, the stock has risen about eight per cent against a market background rise of 0.6 per cent.

There is probably only one action better than buying a share before some major shift of price or development - buy the warrant.

The Guoco 1994 warrant rose 11.46 per cent yesterday to close at $10.70, for a rise of 20.8 per cent on the week.

If these sorts of movements were associated with a potential back-door listing or a volatile second-or third-line stock, it might be forgiven. But it is not.

Guoco is capitalised at $10.43 billion, a gain of about $938 million in two days due to Thursday's and yesterday's trading. That makes it the 30th largest company on the stock market.

The group owns Dao Heng Bank, which absorbed Hang Lung Bank in 1990, and it is about to absorb another formerly government-run bank.

Letting this type of trading go without even an announcement from the directors stating that they know of no development that might affect the group's financial circumstances, might lead some investors to suggest that the local stock market is being madeto look Mickey Mouse.