Sembcorp Marine share price ripped apart by corruption probe

On 3 July 2019, Sembcorp Marine share price collapsed 9% after revelation that its subsidiary in Brazil, Estaleiro Jurong Aracruz Ltda (“EJA”), had been stormed by the Brazilian authorities. The raid was in relation to a corruption probe, nicknamed “Operation Car Wash”.

Sembcorp Marine share price see red

Sembcorp Marine to ride out the storm

After the news broke, I fear the worst for Sembcorp Marine share price.

The corruption crackdown came at a time when Sembcorp Marine is still struggling to handle the industry slump. The timing is definitely bad because it is nearly light at end of tunnel for Sembcorp Marine share price as oil price had recovered to a reasonable USD70 per barrel level in recent months. The latest bombshell is an unexpected setback for the oil rig builder. No wonder investors are riled by the latest news.

Should investors brave the storm with Sembcorp Marine or run for their lives? Make no mistake, it had been a long winter for Sembcorp Marine share price. Five years to be exact. For those who refuse to cut loss in this counter, they must brace themselves for yet another roller-coaster ride.

Sembcorp Marine share price walloped

Obviously, the big boys took the opportunity to whack Sembcorp Marine share price. Short selling volume surged from a low of 45,300 on 2 July 2019 to hit a mighty high of 3.8 million. Since then, the volume reduced drastically to the 100,000 to 160,000 range. However, the drop in the short selling volume does not mean that Sembcorp Marine share price is out of the woods.

Investors would recall the hefty $552 million fine slapped on Keppel Corp in late 2017. The monstrous penalty caused Keppel Corp to suffer net loss of a staggering $496 million in early 2018. Keppel share price subsequently plunged from $8.70 to the current $6.70. The counter never really recovered from that knockout blow. Therefore, investors should expect similar fallout for Sembcorp Marine share price in the coming months.

Even though Keppel Corp and Sembcorp Marine are touted to be the world number 1 and 2 oil rig builders respectively, they belong to different leagues. While Keppel Corp share price can easily withstand the impact of the massive fine, the same cannot be said for Sembcorp Marine share price. This is because [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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