Hong Kong: It is a stock market mystery.
A high-flying Chinese real estate company loses billions of dollars in value one week, then recovers the next. And no one, including the company's executives and regulators, can say exactly why.
"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," the company, Goldin Properties, said in a stock exchange filing on Tuesday.
Unexplained price swings are not unheard of in Hong Kong's volatile stock market. But the sheer scale of the whipsaw trading in recent days is drawing attention to the investing risks, particularly when the market is riding high.
Shares of Goldin Properties, which lost 40 percent last Thursday, were up 43 percent on Tuesday. Shares of a related company, Goldin Financial - which, like Goldin Properties, is controlled by billionaire Pan Sutong - plunged more than 40 percent last Thursday. And a day before that, shares in the Hanergy Thin Film Power Group, a solar equipment manufacturer controlled by Chinese billionaire Li Hejun, fell 47 percent before trading in the stock was suspended pending an announcement of "inside information."
All three companies have offered no explanation. Regulators, too, have been quiet.
The situation underscores the sometimes opaque nature of the Hong Kong and Chinese markets. Some companies like Goldin often have only a small number of shares trading on the open market, making them especially susceptible to large swings.
Information for such tightly controlled companies can also be sparse. Companies are not subject to the same disclosure requirements as they are in other major markets, including the United States. Investors in Hong Kong and China also lack access to protections common in the United States like class-action lawsuits.
The companies all have similar traits. All three are tightly controlled by their billionaire owners.
Shares of all three have rocketed up in recent months, partly as a result of enthusiasm from the rally in mainland China's stock markets spilling into Hong Kong.
Before the sell-off 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," 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 not met 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.
© 2015, The New York Times News Service
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