SINGAPORE (Jan 25): What was shaping up to be a ho-hum market open in Singapore suddenly became the most dramatic session in years, with a haphazard spree of sell orders causing a US$41 billion ($55.8 billion) crash in the city’s biggest stock.

Jardine Matheson Holdings, the flagship investment firm of a 186-year-old conglomerate that hadn’t posted a double-digit stock decline since April 2009, plunged 83% in pre-market trading on Thursday. While the drop reversed almost as quickly as it happened, some 167,500 shares changed hands at prices less than a quarter of the previous day’s close.

Speculation raged across trading desks as to whether an inept human or badly-programmed machine was to blame. Sell orders overwhelmed bids during the pre-open, for which neither a fat finger nor a malfunctioning computer system were responsible, Singapore Exchange said in an e-mailed statement after the market closed. There was no evidence of manipulation and trading was orderly, the bourse said.

Still, if the orders themselves weren’t a mistake, the price reaction almost undoubtedly was. It’s a reminder of how quickly losses can happen in lightning-fast financial markets, exacerbated in this case by the fact that Singapore’s circuit breakers only kick into action when the regular trading session begins. Those who sold at the pre-market price left about US$9 million on the table, according to Bloomberg calculations.

“The extent of the price plunge was certainly out of the norm, one that had folks questioning if it had really occurred," said Jingyi Pan, a market strategist at IG Asia Pte in Singapore. “The rapid movements unfolding in the early hours of the market open could have enabled this to slip away.”

Nursing Losses

Three market makers are nursing losses from selling amid the plunge, while more than a dozen counterparties snapped up the cheaper shares for an instant profit, according to a person with knowledge of the matter, who asked not to be named because they’re not authorized to speak publicly about the matter.

The exchange isn’t letting the sellers off the hook. They had "ample time" to withdraw their orders if they didn’t want to offload shares at the low price, SGX said after reviewing the incident and deciding not to cancel the trades.

“Apparently there is lack of protection mechanism during pre-market hours," Margaret Yang, strategist at CMC Markets Singapore said by e-mail. “Lack of liquidity in Jardine Matheson amplified the price movement, and this is a common issue across Singapore’s equity market."

Jardine is aware that an electronic trading error occurred, Jessie Tsui, a spokesperson for the conglomerate, said by email before the SGX statement.

The Jardine Matheson group, founded in July 1832 in China and headed by the Keswick family, was one of the “hongs,” or trading houses that shaped the development of Hong Kong for more than a century. After moving its listing from Hong Kong to Singapore, the group has gradually shifted its business toward Southeast Asia. It also has investments elsewhere, including in Rothschild & Co.

The conglomerate’s units operate a wide range of businesses ranging from running Pizza Hut restaurants in Asia to hotels and Mercedes-Benz dealerships in the region. The group, also known as Jardines, generated more than US$83 billion in revenue and US$1.57 billion in underlying profit in 2017, according to its website.

The group, boasting more than US$82 billion in assets, is the biggest landlord in Hong Kong’s Central District, the world’s most expensive office market, where its holdings include the Mandarin Oriental Hotel. It also owns the Excelsior hotel on Lot No. 1, the first land auctioned in Hong Kong in 1841