STRING OF HK STOCKS PLUNGE
Seventeen firms tumbled by more than 40pc, wiping out HK$47.8b in market value
ASTRING of Hong Kong stocks suddenly plunged yesterday, with traders pointing to links between some of the firms and a brokerage that’s under regulatory investigation.
Seventeen firms tumbled by more than 40 per cent at the close, losing a combined HK$47.8 billion (RM26.17 billion) in market value. China Jicheng Holdings Ltd, an umbrella maker, and GreaterChina Professional Services Ltd sank 90 per cent.
Lerado Financial Group Co, whose shares were halted by Hong Kong’s securities regulator this month, had previously disclosed an investment in China Jicheng and an underwriter role on a GreaterChina share placement in 2015.
“We’re seeing a domino effect; all the companies in the same network got cut,” said Francis Lun, from Geo Securities. These shares are “owned by the same group of people so they must be experiencing a liquidity crunch and they don’t have the money to support the share prices”.
The sell-off, which sent the city’s Growth Enterprise Market sinking the most since 2015, is reinforcing concerns about risks in the world’s fourth-largest equity market after a series of spectacular plunges.
While Hong Kong’s benchmark index is among the best performers this year, declines in companies such as China Huishan Dairy Holdings Co — which tumbled 85 per cent in a single day in March — have burnt some investors.
In the 2015 document, Lerado outlined plans to raise money to expand the margin lending business of unit Black Marble, and said that Black Marble — which was formerly called Yim Cheong Share Broking and Investment Co — was planning to underwrite a placement for GreaterChina Professional and an open offer for China Investment and Finance Group Ltd. China Investment fell as much as 94 per cent yesterday before paring its loss to 50 per cent.
Lerado owned almost 1.5 billion shares in China Jicheng as of December 31, according to its annual report.
The broader Hong Kong market was resilient to the declines yesterday, with the benchmark Hang Seng Index losing 0.1 per cent and the Hang Seng Composite Small Cap Index sliding 0.4 per cent. Still, the picture looked more grim on the city’s small-cap Growth Enterprise Market, which is home to some of the plunging shares. Bloomberg