Newspaper article International New York Times

Hong Kong Puzzled by Wild Trade in 3 Companies

Newspaper article International New York Times

Hong Kong Puzzled by Wild Trade in 3 Companies

Article excerpt

The scale of the mysterious activity in the last week, which wiped out and restored billions of dollars in value, is baffling even veteran investors.

Dramatic, 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 a related company, Goldin Financial -- both controlled by the billionaire Pan Sutong -- both 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 by 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 common trait is that all had seen their shares rocketing 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. …

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