Recently, a number of small-cap stocks in the Hong Kong stock market have been suspended by the Hong Kong Securities Superintendent, first Credit one (08215), followed by China Huaren Medical (00648) and Health International Medical (03886), and this time it was convoy Global (01019) who was shot.

At about 11:00 on December 7, convoy Global holding shares suddenly announced the suspension of trading, and the Hong Kong Independent Commission against Corruption and the Hong Kong Securities Regulatory Commission raided the headquarters of convoy Global in North Point with a search warrant early on Thursday morning. a total of three senior officials of listed companies were arrested. Convoy Vice Chairman Feng Xuexin and Executive Director Chen Lier were also invited to the Independent Commission against Corruption to assist in the investigation.

It is worth noting that in May this year, in the "Enigma Network: 50 Hong Kong stocks that cannot be bought" published by David Webb, a famous independent stock commentator on Hong Kong stocks and a former non-executive director of the HKEx, all the suspended stocks mentioned above were on the list, and convoy Global was one of the "storm centers" of this network.

The Hong Kong Securities Superintendent has repeatedly fired shots to "eliminate demons".

In June this year, the scene of the collective collapse of penny stocks in the Hong Kong market is still vivid. The Hong Kong Securities Supervision Commission has further stepped up its supervision of these "malignant tumors" of Hong Kong stocks, which have long been criticized by investors all over the world. this raid and arresting people also reflects the determination of the Hong Kong Securities and Exchange Commission, and this "enigmatic network" has become the focus of the Hong Kong Securities Commission's investigation.

David Webb, who published the network map, said that some of the Hong Kong stocks mentioned in the table have already appeared bubbles, while others are because these companies have a large amount of investment, but the disclosure of investment interests is 5% lower than the normal disclosure threshold, and the most important thing is that the cross-shareholdings of the 50 listed companies in the table are serious, the relationship between them is complicated, and the investment orientation is not based on the interests of shareholders.

The target of the raid, convoy Global, is extremely obvious on this issue, not only entering the list of "50 Hong Kong stocks that cannot be bought", but also holding a large number of other stocks on the list.

The picture above is only part of this "enigma network", but judging from the arrows around it, convoy Global can also be regarded as one of the "storm centers" of this shareholding relationship network. Health International Medical and first Credit, which also mentioned earlier, are also inextricably linked with it and have become the key targets of the Hong Kong Securities and Futures Commission.

As a matter of fact, since the beginning of the year, the Hong Kong Securities and Exchange Commission has been planning to step up its crackdown on thousands of shares and pointed out at the opening ceremony of the Lunar New year of the Hong Kong Stock Exchange that the issue of the rights issue of "old shares" is a "matter of principle" rather than a "digital problem". Before the flash crash in June this year, Tang Jiacheng, chairman of the Hong Kong Securities and Exchange Commission, even released harsh words, hoping that the market would not mention thousands of shares in the next five to 10 years.

Subsequently, the HKEx also began its first "clean-up" against thousands of shares in the Hong Kong stock market: Wanya Enterprises (08173), China Biological Resources (08129) and Waldori Group (01139) were all delisted at the end of July. The rights issue request of China Agricultural products Trading (00149) was also rejected on September 4, so the reason for "unreasonable fund-raising" was rejected.

After the heavy punch in the third quarter, the Hong Kong Securities Superintendent recently launched a second offensive. As mentioned at the beginning of the article, following the suspension of trading in the first Credit on November 24, three stocks, including Kangjian International Medical, China Huaren Medical and convoy Global, were suspended from trading in Hong Kong in just two trading days. Not surprisingly, these four stocks were also members of the "enigma network".

It seems that Hong Kong regulators are finally getting serious this time.

How does Kang Hong move towards suspension step by step

Back to the protagonist Conghong Global, who is the "center of the storm"? How to step by step towards the road of being ordered to suspend trading?

According to the information on the company's website, convoy Global was founded in 1993 and has grown from a small company of 10 people to an enterprise with 1600 professional financial advisors. It was listed on the Stock Exchange of Hong Kong in 2010 and is currently known as the largest listed independent financial adviser in Hong Kong.

In the seven years since its listing, convoy Global has changed its name many times. From "convoy Financial" to "convoy Finance" to now "convoy Global", the name is getting bigger and bigger, but investors familiar with the Hong Kong stock market should know that frequent name changes are also marked with the word "global". You have to be careful when you start.

In terms of performance, in sharp contrast to the high-end name, the company has lost money year after year since 2015:

It was in 2015, when it suffered huge losses, that convoy Global began to offer a large proportion of shares at a discount, and successively introduced a number of listed companies, such as Junyang Finance (00397), Mutual Entertainment China (08081) and Zhiyi (08100). These three are still members of the "enigma network" list, or how to say that convoy is the "storm center"?

I believe we are all familiar with the routines. The stock price soared before the placement, the shareholders left the market when they rose sharply, and they collapsed after leaving the market. Without procrastination, it is like a textbook of financial and technical operation mode.

After being overturned and sold by a number of shareholders, convoy Global's shares were swept in by Kaisa Industry (01638) Prince Guo Xiaoqun, and became the new single largest shareholder of convoy with 29.91% of its shareholding.At the beginning of this month, Guo Xiaoqun, who saw the true face of Kang Hong, issued an announcement calling for Concord to hold a shareholders' meeting to remove eight former directors of the company, including Cao Guizi.

In addition, the Hong Kong Independent Commission against Corruption (ICAC) also received a report that the senior management of the company suspected of misappropriating public funds and set up a private company to lend to the private sector as an intermediary to make a profit. some financial institutions are also suspected of knowing that some borrowers have applied for huge loans with false documents, but still approve the relevant non-performing loans, involving interests as high as 47 million yuan.

In the latter story, as mentioned at the beginning of the article, senior executives of the stock suspension were arrested, and three senior executives of the company had been arrested as of press time, but Chairman Wang limin has been released on bail, and operations by the Hong Kong Independent Commission against Corruption and the Hong Kong Securities and Exchange Commission are still continuing. sources expect more arrests.

But at this point, I have to mention another protagonist of this "storm center"-"shell stock big player" Cao Guizi.

Cao Guizi, a big player in Shell stocks.

Cao Guizi can be regarded as a celebrity in the shell stock circle of the Hong Kong market. The main identity is the founder of another health international medical company, which has just been suspended. He spent 11 years listing Kangjian from the operation of a general medical clinic. He even acquired shares from Li Ka-shing and Hong Kong "toy king" Tsai Chi-Ming.

A small clinic has won the favor of so many bosses that Cao Guizi has to admire Cao Guizi's amazing interpersonal skills, but he does not seem to use this ability in the right way. At present, his so-called "health department", almost all of them appear in the "enigma network" above.

Since these shell stocks under Cao Guizi hold no more than 5% of each other, they can pledge stocks to obtain funds for continued operation without disclosure, and they can also speculate stock prices or even sell shells to make profits by means of mergers and acquisitions, rights issues and split shares. This is also the standard way to play with thousands of shares.

In 2013, Wang limin, chairman of convoy, introduced Kangjian as a shareholder, and the highest shareholding of Kangjian reached 25% in 2014, but after the collapse of penny stocks this year, Cao Guizi had a premonition that something was wrong and began to ask his other shell companies to reduce their holdings in Kanghong. Guo Xiaoqun was also invited to help pick up the goods.

But Guo Xiaoqun doesn't like him. Can he not know who Cao Guizi is? Sure enough, after intensively increasing his holdings of convoy global 3.728 billion shares to 29.91%, the first thing he had just acquired was to call a special general meeting of shareholders to remove Cao Guizi from the company's board of directors.

On the other hand, "Toy King" Cai Zhiming also came forward to clarify that he was not a behind-the-scenes financier of Kangjian, nor did he participate in other listed companies under Cao Guizi's name, and he was even less interested in manipulating stock prices to deceive investors'"unvirtuous money." buying a stake in Kangjian is actually a "trap".

He said frankly that he is not familiar with the operation of the stock market, and that his own toy and real estate business has been on the market, but he has not been listed for many years. Of course, he will not work with Cao Guizi to speculate in penny stocks. At present, the two have no contact, and he will not contribute money to help Cao Guizi. As for the appointment of her daughter Cai Jiayi as chairman of Kangjian, Cai Zhiming said that she was only occasionally involved in the company's medical business, and that Cao Guizi had never let his father and daughter know about the stock or financial transactions involved in Kangjian. Cai Jiayi does not hold shares in Kangjian.

In such a plot, there is more or less the meaning of "one person is in trouble, all parties like it", from which we can see how Cao Guizi's partners treat him.

In short, the global board of directors of convoy has completed a major change, and interim chairman Chen Zhihong also expressed his belief that the new director can get convoy back on track. Today, with the increasing crackdown on thousands of shares by the Securities and Exchange Commission in Hong Kong, the future life of Cao Guizi, a big player of shell stocks, may not be easy.