New | Infinity Group shares climb sharply in Hong Kong on heavy volume
Shares of Infinity Group Financial Holdings and Pizu Group Holdings soared on Tuesday in Hong Kong, with analysts saying investment money was flowing into smaller cap stocks in the market.
Infinity, a company whose losses more than tripled to HK$23.44 million in 2014, jumped 57 per cent to HK$1.57 by Tuesday noon.
The second biggest gainer was Pizu Group Holdings, a GEM-listed software company. Its share price leapt 44.1 per cent to 49 Hong Kong cents. On Monday, the company announced it would acquire several manufacturers and sellers of civil explosives for HK$837 million.
“The blue chips are taking a breaker. Investors are focusing on second liners,” said Louis Tse, a director of VC Brokerage.
“There is lots of hot money coming to Hong Kong from the mainland. There is lots of speculation,” said Kenny Tang Sing-hing, chief executive of Junyang Securities.
Infinity said in a filing to the exchange it was not aware of the reason why its stock soared.
The company won approval late last year to set up wholly foreign owned enterprises (WFOEs) that allowed it to expand into the finance leasing business. Infinity had been involved in the textile business but shut it down last January and the company said in its annual report it is optimistic the expansion would be profitable for the firm, according to Infinity’s annual report.
“In view of the booming growth of the finance lease industry in the PRC in recent years, the Group has carried out the finance lease business by setting up Shanxi Sino Top and Rong Yuan to capture the business opportunity,” the report said.
Volume traded in Infinity topped 21 million shares by late on Tuesday, versus the five-day average of about 2.4 million shares.
The finance leasing business would allow Infinity to lease assets and earn rentals plus interest from those assets.
Small cap stocks in Hong Kong trade at much lower valuations than mainland small cap stocks, which make Hong Kong small cap shares with promising prospects attractive to mainland speculators, Tang explained.
Infinity has a market capitalisation of HK$1.48 billion and a float of 229 million shares.
The third biggest winner was Mission Capital Holdings, which is engaged in commodities trading in Asia and securities investments in Hong Kong. Its shares were suspended but resumed trading on Tuesday morning. Its share price surged 40.3 per cent to 43.5 Hong Kong cents on Tuesday noon, after the company announced it was acquiring two companies for a total of HK$1.2 billion.
One of the companies to be acquired, Skyway Securities, provides brokerage services and margin financing, while the other company, Skyway Futures, trades in futures contracts.
“The speculators are buying the shares on news the companies are going into new businesses, because they are buying into the new businesses,” said Tang.
The biggest loser on Tuesday was Vision Values, a computer services firm with market capitalisation of HK$1.5 billion, whose share price fell 19.2 per cent to 59 Hong Kong cents.
Feishang Anthracite Resources, an anthracite coal company with market capitalisation of HK$2.25 billion, whose share price dropped 18.3 per cent to HK$16.30. Both companies experienced a sharp rise in their stock prices in recent days before falling steeply on Tuesday.
When a Hong Kong-listed firm said it could not explain the volatility of its stock price, that may not satisfy the regulator Securities and Futures Commission (SFC), who may ask further questions of the company or take further action, said Tse.
