Singapore Exchange enquires SMRT on single day gain

Shares at SMRT Corp staged their widest single day gain after soaring almost 20 percent yesterday, reported The Straits Times. Shares of the transport operator climbed 21.6 percent to hit an intra-day high of $1.24 before closing at $1.22 - attracting the attention of regulator Singapore Exchange in the process. 

According to the English daily, the large gains are believed to be the cause of a widespread speculation that will see SMRT sell off its rail assets to the Government.

Shares of other rail operator - SBS Transit and parent company ComfortDelGro - also increased by seven percent and three percent respectively. 

The local paper also reported that market watchers believe that punters may be assuming SBS Transit will follow suit with operating assets of its North-East Line.

Temasek-owned SMRT is led by former Army Chief, Desmond Kuek, who made a detailed submission to the Government on Wednesday, to move its rail business to a new financing framework, after months of discussions.

The Government introduced a new financing framework in 2010 with SBS Transit's Downtown Line being the first under the new framework. Under the new structure, the Government owns all assets, and is responsible for replacing them. This will allow operators to focus on meeting operating service standards and maintenance.

Regardless, the hindrance to Mr. Desmond's plans has been the valuation of SMRT's assets, as well as the remaining years of its current operating contract. The contracts for the older North-South and East-West lines' terminate in 2028, while contract for the Circle Line expires in 2019.

In addition, there were also widespread rumours within the market of SMRT either being privatised - and even nationalised - although analysts argue this is less likely.