The Australian Securities and Investments Commission (ASIC) and the Australian Stock Exchange (ASX) started on Monday night investigation of a fake press release that caused losses to Whitehaven Coal (ASX: WHC) and its shareholders.
The fake announcement that the $1.2 billion loan of the miner was allegedly cancelled by ANZ Bank was traced to environmental activist Jonathan Moylan who said the loan facility to help Whitecoal, owned by billionaire Nathan Tinkler, build a new mine was pulled due to concerns of the mine's impact on agriculture and the environment.
Mr Moylan and his group, Front Line Action on Coal, who admitted the hoax, said their action was motivated by the anticipated negative impact of the miner's Maules Creek project near Narrabri in New South Wales.
On Monday, 9.65 million Whitehaven shares were traded which is more than twice the 15-day moving average of 4.6 million shares and caused stock prices to tumble down up to 8.8 per cent before trading was halted at 12:45 p.m.
However, Whitehaven shares recovered the losses after the trading halt was lifted and the stocks closed 2 cents down at $3.51 after hitting a low of $3.21
Whitehaven said it was studying if it would launch legal action over the fake press release, while ANZ said it would cooperate with authorities on the probe.
ASIC said stockholders who sold their Whitehaven Coal shares on the basis of the fake press release would not have an automatic right to have their trades cancelled.
The volatility of share prices to speculations has led Middletons Securities to advise Australian investors to avoid five types of investment in 2013. These are:
1. Long-dated fixed interest investments - Rates are almost 2 per cent lower compared to two years ago and would likely fall further. Investors who hold 10-year bonds could be stuck with both low rates and falling asset values if inflation kicks in during the next decade.
2. Traditional media stocks - Except for New s Corp's shares which had gone up by about 40 per cent, changing business models for the delivery of news, entertainment and advertising are threatening the survival of traditional businesses. Gina Rinehart should know this because the value of her shares in Fairfax Media had significantly gone down along with company profits.
3. Engineering and contracting companies - Recent falls in resource prices are indicators that the high growth rate of the past for supplier of services to the mining industry is about to end.
4. Retailers and retail property - Blame it on consumers holding tightly to their purses and competition from online retail. While consumer confidence is expected to improve at some point, weakening of the Australian dollar could cause prices to go up and sales volume to move in the opposite direction.
5. Small resource companies - Again, this development is because of falling commodity prices. To be hit hardest are small, high-cost resources companies and explorers.
Experts added the stocks of many companies would struggle in 2013, but some segments may have better chances of improved revenues, particularly companies that can capture sales from quickly growing economies abroad (read: India and China) or those in countries where there is a quick jolt in spending as these economies dodge the fiscal cliff.