High-flying Hong Kong stock plunges 98 per cent after MSCI drops plan to add into indexes
- Chinese marble producer ArtGo Holdings had gained almost 3,800 per cent this year, the most among companies with at least US$1 billion capitalisation
- MSCI rejects stock two weeks after announcing intention after assessing ‘investability’ concerns
MSCI dropped plans to add a high-flying Hong Kong stock to its suite of indexes, a rare reversal after some market participants expressed concerns about the company’s investability.
ArtGo Holdings, which had soared almost 3,800% this year for the world’s biggest gain among companies with a market capitalisation of at least US$1 billion, plunged 98 per cent following the decision. That wiped out US$5.7 billion of value before trading was suspended.
The New York-based index compiler said it would no longer include the stock after “further analysis and feedback from market participants on investability,” according to a statement on Wednesday. It announced its intention to include the marble producer just two weeks ago.
An ArtGo representative said the company could not immediately comment. MSCI and FTSE Russell, which includes ArtGo in one of its China indexes, did not respond to requests for comment.
ArtGo’s rally had flummoxed market veterans in Hong Kong, with activist investor David Webb saying in September that the stock was a “bubble.” Its surge was the latest in a long list of extreme, unexplained price swings on the Hong Kong exchange that have prompted some investors to urge index compilers to screen out such stocks.