Sanergy Group, a maker of graphite products, tumbled 98 per cent after Hong Kong’s securities regulator warned investors against trading the stock because of its highly concentrated ownership.
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The stock slumped to HK$0.39 on Tuesday, erasing HK$20.1 billion (US$2.58 billion) of the company’s market value. About 1.05 billion shares changed hands for the day, more than double the stock’s 30-day average, according to Bloomberg data. The Hang Seng Index fell 0.4 per cent.
The meltdown came after a statement issued by the Securities and Futures Commission (SFC) said that 90.2 per cent of Sanergy’s shares were in the hands of a small group of investors, a structure that would potentially spell risk for investors.
“Shareholders and prospective investors should be aware that the price of the shares could fluctuate substantially even with a small number of shares traded, and should exercise extreme caution when dealing in the shares,” the SFC said in the statement.
The drastic plunge continues a roller-coaster ride for the stock, which had jumped more than 400 per cent within three months through mid-August. The wild swing underscores the risks posed by a swathe of small-capitalisation stocks trading in the city, which are now facing increased scrutiny from regulators as they seek to eradicate malfeasance and protect investor confidence.