Shares of Next Digital, publisher of Apple Daily, rise after founder Jimmy Lai quits as chairman amid court cases

Shares of Next Digital, the publisher of Apple Daily newspaper, jumped by as much as 25 per cent in Hong Kong after founder Jimmy Lai Chee-ying resigned as chairman amid mounting court cases relating to national security and fraud.

The publisher rose to as high as HK$0.325 on Wednesday from HK$0.26 before ending the day 3.9 per cent higher at HK$0.27, giving it a market value of just under HK$699 million (US$90.2 million). The stock has risen 3.9 per cent in volatile trading this year.

Next Digital said Lai quit the post to spend more time dealing with his personal affairs, according to an exchange filing late on Tuesday. He was replaced by non-executive director Ip Yut-kin, who has been with the group since its first publication and owns a 0.5 per cent stake in the company.

“Lai’s resignation will have a positive impact on the near-term share price of Next Digital, as he has distanced himself from the company,” said Tom Chan Pak-lam, chairman of the Institute of Securities Dealers, a guild for the brokerage industry in Hong Kong. Chan spoke late on Tuesday.

Lai, who founded Apple Daily in 1995, is the most high-profile person to be detained and charged by Hong Kong police after the controversial national security law imposed by Beijing on the city came into effect in late June. The media mogul is also facing charges stemming from anti-government protests in the city last year and fraud charges relating to office leases.

He was released on HK$10 million (US$1.3 million) bail on Christmas Eve after spending 20 days in custody on charges of endangering national security and fraud. The decision was slammed by the state-run People’s Daily, which claimed it “severely hurt Hong Kong’s rule of law.” Hong Kong prosecutors are planning to appeal against his bail.

A group of Hong Kong lawyers has expressed concern over the Chinese media’s commentary, warning the “unfounded attacks” could prejudice Lai’s right to a fair trial.

The tycoon was first charged and arrested in August, prompting some investors to pump up the stock, while anti-government activists snapped up copies of Apple Daily as a show of support. The stock soared by about 1,200 per cent over two days following his arrest, only to collapse by 99 per cent in the subsequent days.

Fifteen people were arrested a month later in connection with the stock’s volatile trading following a probe into possible market manipulation.

Since his arrest, Next Digital has been selling assets, including an office building in Taipei for US$61 million, to raise cash and support its operations. It has already sold four office buildings in Taiwan.