Small caps plunge on SFC market probe rumors
Tuesday, May 12, 2015
Shares of small-cap companies including Yan Tat Group Holdings (1480) and Jicheng Umbrella Holdings (1027) tumbled yesterday as reports emerged that regulators were probing abnormal gains in the stocks. Yan Tat – a mainland-based manufacturer of printed circuit boards with a market capitalization of about HK$2.2 billion – dived nearly 50 percent to HK$9.10 yesterday. It soared to as much as HK$102 on Friday and then falling to HK$17.44 on the same day. It was listed in December. Another newly listed firm, Fujian- based Jicheng Umbrella, surged from its debut price of HK$1.10 in February to hit HK$13 yesterday – but that was down 18.2 percent from Friday after it announced a share split.The Securities and Futures Commission, according to local media reports, is conducting a probe into the two counters along with several other small-cap shares.
Analysts believe the probe is needed to curb heightened speculation on such stocks, which has reached fever pitch recently.
The local Growth Enterprise Market index has jumped more than 50 percent since the start of the year, while the Hang Seng Composite SmallCap Index has surged over 30 percent compared to a 17 percent upturn in the benchmark Hang Seng Index.
Other stocks with intraday price movements of more than 10 percent are also on the SFC’s probe list, a local media report said.
The SFC and the Hong Kong stock exchange said they do not comment on individual cases.
Analysts generally believe the abnormal price movements in Hong Kong were driven by more mainland capital flooding into the local market.
Such inflows are following a similar pattern detected since last year on the ChiNext board, which is China’s version of the Nasdaq.
The ChiNext Index has more than doubled this year.