Short-selling allows an investor to make money on borrowed scrips in anticipation of the stock price falling. However, if the price rises, they will incur a loss as they would have to buy the shares they do not own at the prevailing market price in order to return them.

Some market experts believe the markets are at historic highs. Potential upsides would be spurred by hints of further government support through reduced rates and quantitative easing (QE) rather than positive fundamental economic data.

But George Rippon, a director at fee-based financial advisory group THG Select, said this was hardly a scenario that will secure long-term growth. " In fact, it's a scenario that could see a dramatic drop instead."

Mr Rippon is concerned that too much growth has been generated by intervention and that when this support is withdrawn, the drop could be significant." However, if tapering represents only a small drop in QE, then markets could yet still continue to rally as a result of investors feeling comfortable that despite a slight reduction QE will continue apace. This could see the bubble get bigger."

He cautioned: " However, beware of the sand that this rally is based upon - a false environment created by politicians to prevent the full failures of the economic model pre-2008 being truly felt . . . yet."

As for 2013, Singapore-listed LionGold Corp, one of the stocks caught in the infamous penny stock saga this year, has been given the dubious honour of being the second best short of 2013 in Asia, even as the local authorities are investigating the trading activities surrounding the gold miner.

" . . . Singapore-listed LionGold Corp topped the list having seen its share price tumble in October, erasing nearly 90 per cent of its market value," Markit analyst Simon Colvin said in his " Top Asian Shorts" report.

LionGold, together with Asiasons Capital and Blumont Group, was declared a " designated" security in October as the authorities slapped on trading restrictions that were subsequently lifted. The Monetary Authority of Singapore and the Singapore Exchange have been conducting an extensive review of the trading activities of these stocks.

Their meltdown has hurt many retail investors, remisiers and brokerages.

AmFraser Securities, for one, faced a potential loss of up to RM120 million (S$47 million) over the three stocks. Global broking giant Interactive Brokers has launched the largest legal action so far in the wake of the October penny stock saga, taking aim at at least 10 clients as it seeks to recover about US$68 million of losses.

Although eight materials stocks made Markit's list of most successful shorts in Asia, the region's tech companies also proved profitable for short-sellers.

Taiwan provided the most fertile ground for tech short-sellers, accounting for 10 of the 11 top Asian tech shorts of the year.

Of this group, TPK Holding was the best-performing short, having seen its share price fall by 71 per cent since short-sellers started to target the company in May. Short-selling activity was particularly well timed in TPK, avoiding the bull run at the start of the year and focused on the second half during which TPK's shares fell by more than 70 per cent.

The top short in Asia was struggling Australian drug company, Pharmaxis. Those who have shorted Pharmaxis would have made a tidy profit as the stock has seen its share price fall a massive 91 per cent over the last year as the US Food and Drug Administration rejected its application to market its cystic fibrosis treatment. Short-sellers were well positioned ahead of these developments with the company seeing a fresh annual high in demand to borrow in January, just prior to the FDA decision.

Markit looked at the performance of companies since they recorded a fresh annual high in short interest to the beginning of December, above a threshold of 3 per cent of shares on loan.

" We find that shorts have been able to uncover plenty of underperforming shares over the last 12 months. Taking a look at the shares which tumbled by more than 30 per cent since posting a fresh annual high in demand to borrow, we uncovered 39 top shorts in Asia and 15 in Europe," Mr Colvin said.

In Europe, materials companies dominated the list, after being hit by fluctuating metal prices and concerns about the health of the global economy. Seven of the top 15 shorts were materials stocks, with gold miner Petropavlosk coming in at No 3. The company's battle with falling gold prices saw its share price fall 61 per cent after short-sellers started to target the company, said Markit.

1

LIONGOLD CORP LTD

COMPANY ANNOUNCEMENT

SUBSCRIPTION OF 98,186,000 NEW ORDINARY SHARES IN THE CAPITAL OF LIONGOLD

CORP LTD (THE ?SUBSCRIPTION SHARES?) ? RECEIPT OF IN-PRINCIPLE APPROVAL

1. INTRODUCTION

LionGold Corp Ltd (the ?Company?) refers to its announcement dated 15 November 2013 in

relation to the proposed subscription of 98,186,000 new ordinary shares in the capital of the

Company (the ?Previous Announcement?).

Unless otherwise defined, all capitalized terms used in this Announcement shall bear the

same meanings given to them in the Previous Announcement.

2. RECEIPT OF IN-PRINCIPLE APPROVAL

Further to the Previous Announcement, the Company wishes to announce that it has today

received the in-principle approval of the SGX-ST for the admission to the Mainboard of the

SGX-ST and the listing and quotation of the Subscription Shares. The in-principle approval of

the SGX-ST is subject to, inter alia, the following conditions:

(a) compliance with the SGX-ST?s listing requirements

(b) a written undertaking from the Company that it will comply with Rule 704(30) and

Rule 1207(20) of the Listing Manual of the SGX-ST in relation to the use of the

proceeds from the Subscription and where proceeds are to be used for working

capital purposes, the Company will disclose a breakdown with specific details on the

use of proceeds for working capital in the Company?s announcements on use of

proceeds and its annual report

(c) a written undertaking from the Company that it will comply with Rule 803 of the Listing

Manual of the SGX-ST

(d) a written confirmation from the Company that it will not issue the Subscription Shares

to persons prohibited under Rule 812(1) of the Listing Manual of the SGX-ST

(e) a written confirmation from Jett Capital Advisors LLC (?Jett Capital? or the

?Introducer?) that it will not pass on any part of the introducer fee, whether directly or

indirectly, to the Subscribers and

(f) an immediate announcement by the Company via SGXNET on:

(i) background information on the Introducer

(ii) directors and shareholders of the Introducer and

(iii) a statement that the Introducer has confirmed that it will not pass on any part

of the introducer fee, whether directly or indirectly, to the Subscribers.

 

Please note that the SGX-ST?s in-principle approval is not to be taken as an indication

of the merits of the Subscription, the Subscription Shares, the Company and/or its

subsidiaries.

3. FURTHER INFORMATION ON THE INTRODUCER

3.1 As stated in the Previous Announcement, Jett Capital introduced Wintercrest to the Company.

The core business of Jett Capital is providing advisory services to entities in the mining and

energy space. Jett Capital is managed and owned by 5 individuals (the ?Founders and

Directors?) who were, respectively, former bankers and executives of corporate advisory

firms. The Founders and Directors of Jett Capital are (1) Dov Wiener, (2) Stephen Silver, (3)

Joseph Riggio, (4) Sam Grauer, and (5) Michael Hennessey. The Founders and Directors,

combined, have advised on transactions in the mining and metals space with an aggregate

value of over US$4 billion.

3.2 Jett Capital (through Fairfax Securities Corporation, which does business as Jett Capital

Advisors LLC) is registered with the United States Securities and Exchange Commission as a

licensed broker-dealer. Jett Capital has been instrumental in arranging various capital raising

transactions involving companies listed on the SGX-ST, Australian Stock Exchange,

Alternative Investment Market of London and Toronto Stock Exchange.

3.3 Jett Capital has confirmed that it will not pass on any part of the introducer fee, whether

directly or indirectly, to the Subscribers.



The Company will make the necessary announcement upon completion of the Subscription.