Regulators investigating Next Digital's abnormal trading prices

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Regulators investigating Next Digital's abnormal trading prices

2020-08-21

Source: Global Times    Published: 2020-08-13


Hong Kong market regulators have questioned some securities firms and requested customer information and transaction records regarding the "abnormal stock prices and trading volume" of Jimmy Lai Chee-ying's media firm Next Digital, local media on.cc reported Thursday.


Shares of Next Digital plunged by 41.54 percent Thursday to close at HK$0.38 ($0.049).


Chinese analysts said the roller-coaster performance of Next Digital shares over the past few days showed signs of international capital making a splash at a time of Lai's arrest and bail.


The stock price was volatile Wednesday. It opened at HK$1.4 and rose to the day's high of HK$1.75, but began to plummet in the afternoon. It closed at HK$0.65, registering a 40.91 percent plunge, with turnover of HK$1.76 billion.


Observers told the Global Times that the fluctuations might be because some secessionist forces in Hong Kong such as Joshua Wong Chi-fung called for support for Next Digital.


The observers predicted that its price will eventually return to its previous low level as the company reported losses of hundreds of millions of Hong Kong dollars last year. They also said those who rushed in to buy could lose their gains soon.


The Hong Kong Securities and Futures Commission (SFC) made a statement Tuesday night saying it strongly advised investors to exercise caution regarding Next Digital shares. It also urged the company to disclose relevant information.


Dong Shaopeng, an adviser to the China Securities Regulatory Commission, told the Global Times Thursday that it is apparent that some global capital was making a spectacle by influencing the company's share price at this time to disrupt Hong Kong's move to safeguard national security.


"The incident clearly shows that capital can also be politicized."


"Securities investigators could look for any illegal use of capital or non-public information or the manipulation of multiple stock accounts for illegal activities," Dong said.


After Lai was arrested for violating the national security law of Hong Kong for colluding with foreign forces, Next Digital shares surged 331.37 percent to close at HK$1.10 Tuesday, a rise of about 1,100 percent from last Friday.


Some local residents complained that the SFC had not moved in a timely manner to suspend trading of Next Digital, saying that unusual movements in the share prices would harm investors' interests.


The Hong Kong Stock Exchange told the Global Times on Thursday that it does not comment on individual companies or their share price movements.


Dong Shaopeng is senior fellow of Chongyang Institute for Financial Studies at Renmin University of China.