AEM share price sank into quicksand

Lifetime Membership From $4.14 on 7 October to the $3.10 mark at the point of writing, AEM share price (SGX: AWX) suffered a devastating meltdown of 25% within two weeks. The spellbinding collapse of AEM share price must have knocked the wind out of shell-shocked investors, sending shockwave to the local market.

To be frank, I am still processing what had happened to AEM share price. For the past two weeks, I have been asking myself if my investment thesis for AEM is still valid. As such, I am writing this article to pen down some of my thoughts. Hopefully, sanity will be restored for AEM share price in the coming weeks.

Troubles certainly came in troops for AEM share price. On 12 October, news reports surfaced that Intel is going to lay off workers amid steep decline for its core business – PC processors. The move by Intel to cut costs may be attributed to the upcoming third quarter financial result, which is likely to be dismal. If investors recall, Intel suffered a brutal US$500 million loss in the second quarter. The troubles faced by Intel rattled AEM share price as the latter derived the majority of its revenue from the US chip maker.

Short-sellers wasted no time punishing AEM share price.  From SGX filing, the short-selling volume on AEM surged to a high of 1.4 million on 12 October (versus the daily average of 400,000). The spike in short selling activities caused AEM share price to plunge. The correction continued on 13 October as short-selling volume swelled to 1.85 million. Subsequently on 14 October, short volume amounted to 1.25 million. After three days of thrashing by the short-sellers, AEM share price caved in and collapsed to the current $3.10.

What truly riled me was that there was no SGX query on the trading swings of AEM share price in the week of 10 October. Very often, we had seen SGX Regco querying management of companies whenever there was sudden surge in share prices. Yet when stocks like AEM crashed within a few days for no apparent reasons, SGX Regco did not intervene. Whilst I understand that short-sellers play an important role in preventing market exuberance and enabling price discovery, they should not be given free play. Their actions had caused massive disorder and unchecked market movements for AEM share price for the past few days.

AEM share price in fireworks!

AEM share price in perfect storm

At one point, AEM share price collapsed more than 13% from the start of the trading session on 13 October. Despite so, the Circuit Breaker was not activated. If the Circuit Breaker had been activated, there would have been Cooling Off period and trading halt to break the fall of AEM share price. Perhaps, that would have reduced the short-selling attacks and stabilized AEM share price. Yet, this was not the case. As an investor, I would like SGX Regco to provide an explanation on this.

Again, I must clarify that the aim of having an SGX Regco query is not to prevent shortists from profiting. Also, I would agree that shortists serve an important role in regulating prices. Rather, retail investors want to know if the management is withholding information that can cause price movements. Most of us know that the short selling attacks are initiated by big boys who have access to advanced info. So we, as retail investors, just want a level playing field. Take for example, AEM management had an analyst briefing on 18 Oct 2022. What transpired and what was shared were not make known to the public.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. I am vested in this counter, so my views on AEM share price (SGX: AWX) may be biased.

AEM share price bottomed?

Apart from Intel troubles, another shock-wave for AEM share price came from the latest US curbs on chip export to China. The new ban should affect global chipmakers like Intel but the immediate impact on AEM is not so clear to me. My assessment is that the move by US could prolong the downturn of the semiconductor industry and further exacerbate the decline in the demand for global semiconductor chips in the short-term.

The recent wave of uncertainties had certainty caused AEM share price to sink into a quicksand. Nonetheless, my opinion is that the counter may have bottomed due to [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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