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Econ's chairman Ong bought Crosstec shares upon recommendation by "individual purporting to be Dr Chan Yan Chong"

·2-min read

Econ’s shares closed Jan 14 at 26 cents, down 8.93% for the day.

Econ Healthcare (Asia)’s decision to make its ill-fated investment in Crosstech Group Holdings was because executive chairman Ong Chu Poh was introduced to the stock “by an individual purporting to be Dr Chan Yan Chong.”

Econ Healthcare, in response to queries by the Singapore Exchange, notes that Chan “was a past acquaintance” of Ong.

Hong Kong-based Chan is a high-profile stock commentator. The Edge Singapore has reached out to Chan for a comment.

“After being made aware of this potential investment and after the company considered publicly available information on Crosstec, including information on Crosstec available on the website of the HKEx such as its annual report and financial statements, a decision was made by Mr Ong to invest in Crosstec shares,” adds Econ.

The nursing home operator cut its losses on Jan 13, incurring a loss of $3.4 million on its total investment of around $4 million, after Crosstec’s share price plunged on Jan 11 and Jan 12.

The loss is equivalent to 9.1% of Econ Healthcare's net tangible asset as of Sept 30 2021.

see also: Econ Healthcare exits Crosstech investment with a $3.4 million loss

In making the investment in Crosstec shares, Econ Healthcare believes it could make better returns from its idle cash.

Following the losses, Econ’s audit committee “will imminently be undertaking a comprehensive review” of its investment policy, related controls and safeguards.

DBS analyst Paul Yong, following Econ’s latest development, downgraded his call on the stock from “buy” to “hold” and cut his target price from 40 cents to 28 cents.

see also: 'Investment gone wrong': DBS downgrades Econ Healthcare to 'hold' after $4 mil investment plummets 84%

Econ’s shares closed Jan 14 at 26 cents, down 8.93% for the day.

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