Source: Finance Association

The collapse and surge in the Hong Kong stock market in the past week seems to have brought the “Big Time” Fang Zhanbo back to Hong Kong using a “burning serial ship” scheme. More than 30 years later, countless shareholders still collapsed in shock and embarked on the path of gambling again after the collapse.

However, aside from the dramatic rise in TV dramas,$XINJI SHAXI (03603.HK)$,$HAOSEN FINTECH (03848.HK)$,$SANERGY GROUP (02459.HK)$und$CHINA TIANRUI (01252.HK)$What exactly is the reason for the sharp fluctuation in stock prices?

The reason for the collapse of Xinji Shaxi's stock price was first revealed

Xinji Shaxi, which collapsed on April 10, is one day later than China's Tianrui Cement, Haosen Fintech, and Shengneng Group, which plummeted on April 9. This company is also known as “the first stock in China's hotel supplies industry,” and the reason for the collapse first came to light.

Looking back, Xinji Shaxi's stock price crashed on the afternoon of April 10. At one point, it plummeted 87% to HK$0.028 during the intraday period. The stock price hit a record low, and the market value fell to HK$42 million. At 3:19 p.m. on April 10, Xinji Shaxi immediately announced the suspension of trading, pending the publication of an announcement constituting insider information about the company.

After the market on April 11, Xinji Shaxi announced that 14.16% of the company's shares had been forcibly sold, causing the stock price to crash on the same day. Mei Zuoting and Zhang Weixin, executive directors and controlling shareholders of Xinji Shaxi, informed the company that 212 million shares were forcibly sold by securities companies in the open market through margin securities accounts. Following this mandatory sale, the shares held by Mei Zuoting, Zhang Weixin, and Zhang Hanquan fell from 52.19% to 38.04%.

Despite this, the two are still controlling shareholders of the company. The board of directors of Xinji Shaxi confirmed that apart from the above situation, it is unaware of other reasons for changes in stock prices and trading volume, and there is no insider information that must be disclosed in accordance with the Securities and Futures Regulations. Xinji Shaxi has applied to the Stock Exchange to resume share trading, which took effect on April 12.

According to public information, judging from the business area and rental revenue of hotel supplies, Xinji Shaxi is the largest hotel supplies mall operator in China, with revenue of 273 million yuan in 2023 and a net loss of 80.267 million yuan.

There was a sharp rise after the collapse of Housen Fintech and Shengneng Group. After resuming trading on April 12, Xinji Shaxi certainly surged 69.81% to close at HK$0.09, with a market value of HK$135 million.

However, the current stock price is still 58.7% short of HK$0.218 before the crash.

Housen Fintech's “bungee jump” rebounds to the bottom, shareholders make a profit

Compared to Xinji Shaxi, which quickly experienced the suspension and resumption of trading and revealed the reason for the sharp decline, the ups and downs of Hosen Fintech and China Tianrui Cement are more intriguing.

At the end of April 9, in the last 15 minutes of trading, Houson Fintech's stock price plummeted by more than 90%. Prior to that, the annual report released by Hanson Fintech showed that it achieved revenue of about 113 million yuan and net profit of 23.173 million yuan in 2023, a decrease of 3.89% over the previous year. In addition, the company has completed the issuance of HK$20 million bonds due in 2026, which are intended to expand existing business and general working capital. Despite the company's announcement that the business is operating normally, abnormal fluctuations in stock prices have attracted the attention of the market.

After experiencing a sharp drop in volume at the end of the session, Horson Fintech once surged more than 730% in early trading on April 10, but then the stock price fluctuated, rising 432% by the end of the day; on April 11, the stock continued to rise 21.28%; on April 12, it closed down 10.23%. Overall, the stock price still plummeted by 49.51% this week, and the turnover reached a record high of HK$54.6537 million.

The reason why China Tianrui Cement's stock price plummeted is still a mystery

Among the stocks that went bankrupt this week, in particular, the cause of Tianrui Cement's collapse was the most widely discussed.

On April 9, China's Tianrui cement volume crashed at the end of the market and plummeted by about 99% within 15 minutes. The lowest intraday share price was once as low as HK$0.035 per share, a record low. At the close, the company's stock price was HK$0.048 per share, down 99.04%, and the closing market value was HK$140 million. At the close of the previous trading day, the total market value of China Tianrui Cement reached HK$14.691 billion. Since February 2023, the share price of China Tianrui Cement has generally remained in the range of HK$5 to HK$6.1 per share.

Staff at the Tianrui Group office of China's Tianrui Cement parent company said in response to media that it was unclear why the stock price plummeted and that the company's production and operation were normal. According to the company's annual report, the loss in 2023 was about 634 million yuan, changing from profit to loss. Although the company said production and operation were normal, sharp fluctuations in stock prices still triggered speculation and concern in the market.

On April 10, China Tianrui Cement announced the suspension of trading before the market in order to announce important internal news within the company. Currently, trading of China Tianrui Cement is still suspended, awaiting the announcement of insider information.

Insufficient liquidity and stock pledges are the greatest possibility

The main reason for the “bungee jump” share price collapse of Tianrui Cement and Haosen Fintech was the liquidity of Hong Kong stocks and stock pledge risks.

The lack of liquidity in Hong Kong stocks has often been mentioned in recent years, and this was shown to the fullest in the collapse of many stocks this week. When stocks are continuously sold under pressure, if the market lacks enough buyers, the stock price may fall rapidly. In the case of Haosen Fintech and China Tianrui Cement, if its trading volume is low, then a small number of sales orders may cause the price to fluctuate greatly. For example, a transaction value of HK$24 million within 15 minutes can knock out Tianrui Cement's market value of HK$14 billion, which shows that Hong Kong stocks are already extremely illiquid.

The next most likely one is stock pledge risk. For example, the 212 million shares of Mei Zuoting and Zhang Weixin, the executive director and controlling shareholder of Xinji Shaxi, were forcibly sold by securities companies through margin securities accounts in the open market, causing the stock price to collapse. China Tianrui Cement has pledged shares several times, and the amount of pledges involved is quite large. When the stock price falls to a certain extent, it may trigger the risk of the pledge to close the position, causing the stock price to fall further. However, closing stock pledges may cause panic in the market, triggering investors to sell stocks, leading to a sharp drop in stock prices.

With only a turnover of more than 20 million dollars, the market value of Tianrui Cement of more than 14 billion dollars was almost reduced to zero. What kind of clash did the buyer and seller have? According to Futu data, sales on the same day were mainly in Zhongwei Finance, which reached more than 20 million, while purchases were mainly at Futu, which reached more than 22 million. Most Futu users were retail investors, and the 22 million purchase was a rebound after Botianrui Cement's extreme decline. However, the seller, Zhongwei Financial, had just completed a major personnel adjustment in mid-late March. There are opinions speculating that sales may be related to this personnel change. In addition, there are also rumors that Tianrui Cement is linked to the collapse of Haosen Fintech or to the thunderstorm of a trust.

editor/tolk