Investors in Hong Kong are baffled by the wild success of the share price of a loss-making investment firm in the city state, which has seen its stock increase by close to 9000% in recent years, seemingly without a catalyst.
Shares in China Ding Yi Feng Holdings Ltd, an investment holding company based in the International Commerce Centre, Hong Kong's tallest building, have rallied 8563% in the past five years, according to a report from Bloomberg Friday.
Here's the chart:
For reference, shares in Amazon have risen about 340% in the last five years, while Apple has seen its stock increase 125%.
The wild gains, however, have some scratching their heads. "Fundamentals do not support the stock's rally at all," Li Yuanrong, managing director of Shenzhen-based venture capital firm 20VC told Bloomberg.
The company has reportedly nursed losses for seven of the last eight years.
China Ding Yi Feng is headed by chairman Sui Guangyi, a figure described as having "investing skills on par with Warren Buffett and George Soros." Company literature describes Sui as a "legendary figure" and an "influential scholar," Bloomberg said. He owns around 16% of the company's outstanding shares, worth somewhere in the region of R8.4bn.
Given the size of China Ding Yi Feng, which has a market capitalization of roughly HK$31 billion (R56 billion), it is now included in several indexes put together by the MSCI, meaning that many huge investment funds like BlackRock and Vanguard have stakes in the company, Bloomberg said.
Hong Kong's stock market is no stranger to wild, unexplained occurrences, and in January, investors were left scratching their heads when several Hong Kong-listed companies plunged on a Thursday afternoon, some losing as much as 80% of their value, seemingly with no explanation.
Jiayuan, a property developer, was the worst impacted by the crash, dropping as much as 81%, and seeing more than $HKD25 billion (R49 billion) wiped from its market capitalization in a single afternoon.
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