Penny Dreadful in Hong Kong? Think penny stocks
As rumours swirled that the end of the road is near, more than a dozen penny stocks lost more than 50 per cent in value on Tuesday
Are penny stocks reaching the end of the road?
Shares of more than a dozen Hong Kong-listed companies – most of them penny stocks – plunged more than 50 per cent on Tuesday morning, on expectations that the Hong Kong securities regulator could act to address the longstanding stigma.
Penny stocks, whose prices are under 50 HK cents per piece, have small market capitalisation and are easy targets for price rigging and manipulation. Moreover, their listings draw investor interest as value vehicles for back-door listings, on top of their core business.
By the time trading closed on Tuesday, prices of 13 penny stocks were at least halved.
China Jicheng Holdings, an umbrella manufacturer, was the biggest loser, plunging 94.3 per cent to close at 1.6 HK cents.
GreaterChina Professional Services, an investment company engaged in asset appraisal, was the second-most severely beaten, ending down 93.4 per cent at 6.4 HK cents.