This Chinese stock was more actively traded than JPMorgan, but hardly anyone’s heard of it

Fangda Carbon New Material Co. isn’t typically a name that jumps to mind when one thinks of the world’s most-actively traded stocks.

Yet for reasons unknown, shares of this obscure Chinese maker of graphite electrodes are suddenly changing hands at a pace usually reserved for the global equity market’s crème de la crème.

On Friday, Fangda Carbon was the 11th most-traded common stock in the world, despite a middling US$8.4 billion market capitalization that failed to crack the global top 1,500. Its turnover exceeded that of JPMorgan Chase & Co., which has a market value of US$331 billion, and came within striking distance of Microsoft Corp., a US$558 billion behemoth.

The flurry of activity, which coincided with a nearly 200 per cent rally in Fangda Carbon’s shares since late June, is all the more extraordinary given the sleepy state of China’s stock exchanges this year. Volatility readings in the $7.1 trillion market are near the lowest levels since the early 1990s, while turnover has dropped about 80 per cent from peak levels in 2015.

Unsurprisingly, Chinese authorities have taken notice. Shanghai’s stock exchange issued written warnings to some investors after observing unusual trading behaviour in Fangda Carbon last week, according to people familiar with the matter.

Regulators are on high alert for suspicious trading activity in the world’s second-biggest stock market after Liu Shiyu, chairman of China’s securities watchdog, vowed to crack down on misbehaviour in the wake of a US$5 trillion equity crash two years ago. The CSRC collected 6.4 billion yuan (US$955 million) in penalties from market participants in the first six months of the year, exceeding the total from all of 2016.

The Shanghai exchange didn’t reply to a request for comment. Fangda’s board secretary and securities department representative didn’t answer calls.