SGX hones ability to scrutinise asset valuations, pressures auditors — will it close the ‘trust deficit’?

SINGAPORE (Feb 4): On Jan 25, Singapore Exchange Regulation (SGX RegCo) briefed several journalists about its plans to play a more active role in determining the scope of statutory audits of locally listed companies, and beef up its capabilities to scrutinise the value of corporate assets.

These new initiatives were at least partly spurred by the collapse of Noble Group amid allegations that it had been cooking its books, and attempts by ISR Capital to acquire a major stake in a rare earths mine in Madagascar supported by two dodgy valuation reports. Yet, questions have been raised about the valuation of assets on the books of companies that have pristine reputations too.

Only four days before the SGX RegCo briefing, The Straits Times published a letter from a member of the public, calling on the authorities to investigate the significant difference between the book value of Ascott Raffles Place Singapore and the price at which it is being sold. On Jan 9, Ascott Residence Trust announced plans to sell the property for $353.3 million, which is 64.3% more than the book value of the asset as at Dec 31, 2018 of $215 million. The sale is expected to result in a net gain of $134 million for Ascott REIT.