Hong Kong-based fintech firms fall after a dizzying rally

Traders work on the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 8, 2022. REUTERS/Andrew Kelly

Aug 9 (Reuters) – Hong Kong-based fintech firms AMTD Digital , Magic Empire Global ( MEGL.O ) and Top Financial Group ( TOP.O ) fell on Tuesday after a meteoric rally this month reminiscent of last year’s meme stocks. rage.

The obscure companies have recorded sensational gains just days after their US market debuts, with AMTD Digital climbing as high as $2,555.30 last week from its debut price of $7.80 in July. At its peak, the company’s market capitalization dwarfed that of Facebook owner Meta Platforms ( META.O ). read more

On Tuesday, AMTD Digital was down 45% to $221. Online brokerage Top Financial traded 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. Shares had risen as much as 6,000% from their IPO of $4 in just the second trading session 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 shares have been at a fraction of the U.S. companies.

“I haven’t seen a fundamental development that you can point to and say this is why it (the rally) is happening,” said Rick Meckler, partner, Cherry Lane Investments.

“Maybe the names change, but there’s still a lot of interest among these investors looking for a place to gamble. In the end, it ends in tears for them.”

AMTD Digital has said it monitors stock volatility. On Monday, the underwriters of the IPO exercised an option to buy an additional 2.4 million shares at the IPO price, taking advantage of the rally.

“It seems strange, and I’m surprised the exchanges or regulators aren’t 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

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