Hang Fat Ginseng stock plunges 91 per cent in Hong Kong before trading is suspended
Margin calls may trigger more dumping, analyst says
Hang Fat Ginseng Holdings, a wholesale ginseng trader listed on the Hong Kong stock exchange, saw its share price almost evaporate on Thursday morning before it halted trading at 10.36am.
The company’s share price plunged by 91.39 per cent to HK$0.03 before the company filed for a trading suspension, pending the disclosure of inside information.
More than 1.46 billion shares were traded on Thursday morning.
Louis Tse Ming-kwong, director of VC Brokerage, said there must have been forced liquidation on the market.
“The recent falls of the Hong Kong market have triggered many margin calls,” he said. “And the creditors – usually brokerages who lent money to the listed companies – are dumping companies’ shares on the market to save their principal.”
The priority for the creditors was to recoup the money they lent, and more similar crashes could happen, Tse said.