Frenetic Trading of 3 Companies Confounds Hong Kong Market
By NEIL GOUGHMAY 26, 2015
HONG KONG — Unexplained price swings are not unheard-of in Hong Kong’s volatile stock market.
But the sheer scale of the mysterious, whipsaw trading of three companies in the past week, which wiped out and restored billions of dollars in value, has drawn the attention of even the most veteran investors. And no one, including the companies, can say exactly why it is happening.
“The board confirms that it is not aware of any reasons for these price and trading volume movements, or of any information which must be announced to avoid a false market in the company’s securities,” Goldin Properties, whose shares surged 43 percent in Hong Kong on Tuesday, said in a stock exchange filing.
The swing on Tuesday added about $3 billion to the company’s market value. Shares in the same company and those of a related company, Goldin Financial — both controlled by the billionaire Pan Sutong — plunged more than 40 percent last Thursday.
And a day before that, shares in Hanergy Thin Film Power Group, a solar equipment manufacturer controlled by the Chinese billionaire Li Hejun, fell 47 percent before trading in the stock was suspended pending an announcement of “inside information.”
All three companies are tightly controlled by their billionaire owners. Another standout trait is that all had seen their shares rocketing upward in recent months, partly a result of enthusiasm from the rally in mainland China’s stock markets spilling into Hong Kong.
Before the sell-off hit last week, shares in Hanergy had risen more than 150 percent this year; Goldin Financial was up more than 300 percent, and Goldin Properties 400 percent.
“The meteoric growth of these companies in share value was abetted by the obscurity of ownership that enabled them, like so many listed companies, to generate aggressive growth in revenue that satisfied a general narrative about China’s rise: the solar power industry in Hanergy’s case and, in Goldin’s, ultraluxurious properties,” Anne Stevenson-Yang, a co-founder of J Capital Research in Beijing, wrote Tuesday in a research note.
A spokesman at Hong Kong’s main market regulator, the Securities and Futures Commission, declined to comment on Tuesday.
But on Friday, Ashley Alder, the chief executive of the commission, said the volatility did “not necessarily imply there is a rise in market manipulation or other misconduct.”
“Of course, well-functioning markets depend on full information and honest trading, and here stern enforcement is essential to deter poor corporate disclosure and trading misconduct,” Mr. Alder added, declining to name specific companies. “Where we are suspicious, we investigate.”
The two Goldin companies also invest in polo clubs, wine storage facilities and trading in the discounted debt of Chinese factories. Hong Kong’s securities commission warned in March that 98.6 percent of the shares in Goldin Financial were in the hands of just 20 investors; such concentrated ownership can lead to swings in price, even on thin trading volumes. The company’s stock also rebounded on Tuesday, albeit more modestly, closing 8.3 percent higher.
In Hanergy’s case, the company’s rapid rise drew more scrutiny after The Financial Times in March published the results of an investigation into abnormal trading patterns in the shares.
When the share price fell last week, news reports in mainland China suggested Hanergy had failed to meet calls from its creditors to repay debts. The company’s parent group denied this, issuing a statement on Thursday saying, “There was no forced liquidation of the group shares as cited in some media reports as the cause of the price plunge of the shares of Hanergy Thin Film Power.”
“Our group’s operations are normal in all respects and we maintain a good financial position with no overdue loans,” it said. The stock remains suspended from trading in Hong Kong. |
