Getty Images
- Another Hong Kong stock just plunged, shedding 76% of its value in 30 minutes of trading.
- China First Capital Group, an investment group that focuses on educational services across China and Singapore, plummeted a total of 78% on Wednesday before trading was suspended at 11:15 a.m. local time.
- CFCG’s fall comes after ArtGo, the world’s best performing stock this year, fell 98% in a single morning last week.
- According to Bloomberg, the stock swings in Hong Kong are shining a light on corporate governance practices within the city.
- View Business Insider’s homepage for more stories.
Another Hong Kong stock just plunged, shedding 76% of its value in 30 minutes of trading.
China First Capital Group, an investment group that focuses on educational services across China and Singapore, plummeted a total of 78% on Wednesday before trading was suspended at 11:15 a.m. local time, not even making it to the lunch break.
CFCG’s fall comes just a week after ArtGo, a marble-mining company listed in Hong Kong, fell 98% in a single morning of trading, wiping more than $5.8 billion from its market capitalization before trading was suspended.
According to Bloomberg, the stock swings in Hong Kong are shining a light on corporate governance practices within the city. Often, large swings like the ones by CFCG and ArtGo are due to major shareholders selling the stock because they borrowed against their positions.
Bloomberg said this can “lead to a domino effect when companies are connected by investors or business lines, and it’s not always clear under Hong Kong’s disclosure rules when a stake has been pledged.”
CFCG is smaller than ArtGo, with a market cap of $2.26 billion HKD ($289 million) versus ArtGo’s market cap of $5.8 billion prior to its fall. ArtGo had been the best performing stock in the world this year with a 3,800% gain, making its 98% fall even more dramatic.
On Tuesday, it looked like the Hong Kong Stock Exchange’s fortunes started to turn around after a poor few months. Protests within the city delayed Alibaba’s IPO earlier this year, and the exchange’s bid for the London Stock Exchange failed.
However, Alibaba delivered a successful debut on the exchange this week, with its stock rising 6.6% after all of the shares offered plus the extra greenshoe shares were sold on the first day of trading. One analyst described it as a major boost to both the city and the stock exchange.
Alibaba rose another 3% on Wednesday, bringing its total gain close to 10% in two days.
