The Securities and Futures Commission is investigating unusual share-trading activities in China Prosperity Holdings (Hong Kong). The SFC has begun an investigation under section 31 of the Securities and Futures Commission Ordinance, the company said in an announcement yesterday. It also said the SFC might suspend trading of its shares if unusual activities continued. This is the second public investigation by the commission into the recent giddy share-price movements of high-technology and Internet stocks. Process Automation (Holdings) announced a week ago that the SFC had launched an investigation into its share-trading movements for possible market manipulation. Process Automation said it had been informed by the SFC that its stock had been targeted by professional investors who might have created 'a false market' to mislead others into believing there had been active trading in its shares. China Prosperity and Process Automation are high-flyers in the recent technology-linked boom. China Prosperity's share price increased 340 per cent last month to close at a high of $3.825 on September 24 amid market rumours surrounding its Internet investments. Trading in its shares has been suspended at the company's request since September 27 and is to resume today. The SFC and the stock exchange also requested that China Prosperity detail all the risks involved in its plan to acquire a 33 per cent interest in an interactive multi-media and Internet service project from businessman Heung Wah-sing. The project - Century Vision Network - was carried out by Win's Prosperity Group (WPG), which is controlled by Mr Heung and China Prosperity's executive director Gareth Tang Yau-sing. In its announcement, China Prosperity said WPG had signed two non-legal binding letters of intent with a wholly owned company of the Telecommunications Bureau of Ministry of Information Industry and a company controlled by the State Administration of Radio, Film and Television. It said the project might not receive the relevant approvals and might not materialise. It also said that the $20 billion valuation of the project produced by its valuer was based on WPG's forecast not independently verified. China Prosperity also made some clarifications on Business Post's report on October 8 regarding the deal. Mr Tang said such clarifications were made 'at the forced request by the stock exchange' and was by no means suggesting any misreporting by Business Post. He also confirmed that the report was based on the information provided by the company.
