Hong Kong-based fintech firms tumble after dizzying rally

Magic Empire Global

09/08/2022 17:41

By Medha Singh and Anisha Sircar
    Aug 9 (Reuters) - Hong Kong-based fintech firms AMTD Digital
 HKD.N , Magic Empire Global  MEGL.O  and Top Financial Group
 TOP.O  tumbled on Tuesday after a meteoric rally this month
that was reminiscent of last year's meme-stock frenzy.
    The obscure companies have recorded eye-watering gains just
days after their U.S. market debuts, with AMTD Digital climbing
to as high as $2,555.30 last week from its debut price of $7.80
in July. At its peak, the company's market valuation dwarfed
that of Facebook-owner Meta Platforms  META.O .  urn:newsml:reuters.com:*:nL4N2ZF326
    On Tuesday, AMTD Digital was down 45% at $221. Online
brokerage Top Financial was trading 14% lower at $17.70, a day
after its shares doubled in value to $20.75. 
    Magic Empire Global, which provides financial advisory and
underwriting services, plunged 81.4% to $21.53. Its shares had
risen as much as 6,000% from the $4 IPO price in just the second
session of trading on Monday.
    While the dramatic gains drew parallels to the frenzy in
shares of GameStop  GME.N  and AMC Entertainment  AMC.N  in
2021, trading volumes in the Hong Kong stocks have been at a
fraction of the U.S. companies.  
    "I haven't seen a fundamental development you could point to
and say this is why it (the rally) is happening," said Rick
Meckler, partner, Cherry Lane Investments.
    "Maybe the names are changing, but there's still a lot of
interest among these investors seeking out a place to gamble.
Eventually, it ends in tears for them."
    AMTD Digital has said it was monitoring the share
volatility. On Monday, the underwriters of its IPO exercised an
option to buy 2.4 million additional shares at the IPO price,
taking advantage of the rally.
    "It seems strange and I'm surprised the stock exchanges or
regulators are not getting more involved because it doesn't
sound like an efficient market," said Joe Saluzzi, co-manager of
trading at Themis Trading in Chatham, New Jersey.
    The Hong Kong-based companies did not respond to requests
for comment outside business hours.     

 (Reporting by Medha Singh, Anisha Sircar, Sruthi Shankar and
Bansari Mayur Kamdar in Bengaluru; Editing by Aditya Soni)
 ((Medha.Singh@thomsonreuters.com; +91 80 6210 0592; Twitter: https://twitter.com/medhasinghs;))