Possibly a bigger scandal is following Hyundai’s MPG brouhaha: There is a stench of insider trading. “This smells pretty bad,” Robert Boxwell, director of consulting firm Opera Advisors in Kuala Lumpur who has studied insider dealing patterns, tells Reuters.
On November 2, 2012, it was announced that Hyundai and Kia had overstated the fuel economy ratings on many of its cars. Not surprisingly, the Hyundai share did a nosedive on the news. However, the stock had already cratered before the announcement. The stock fell 4 percent on November 1 with about 2.2 million shares changing hands, the highest trading volume of the year at that point.
Some say, it is par for the course at Asian bourses. “The idea that insider trading is wrong rather than smart is only being ingrained in the current generation of Asian players, not the older generation who are often still in the driving seat,” said Peter Douglas, founder of GFIA, a hedge fund consultancy in Singapore, told Reuters.