HONG KONG (AP) – Wild gyrations in Hong Kong share prices are raising concerns that a new trading link with mainland China is a conduit for questionable trading practices that could undermine the city’s reputation as a center of global finance.
At least four companies that climbed to dizzying values in only a few months have come abruptly crashing down in the past several weeks for reasons that remain unclear.
The strange trading patterns have gripped Hong Kong’s financial community with a narrative of paper fortunes built quickly and then wiped out in an even shorter time.
The most high profile case is Chinese solar panel maker Hanergy Thin Film Power Group Ltd., now under investigation by the market watchdog. Also affected are two Hong Kong-listed units of Chinese billionaire Pan Sutong’s Goldin conglomerate involved in horse breeding and wine trading.
The most recent is Digital Domain Holdings Ltd., whose main business is a California special effects firm founded two decades ago by Titanic and Avatar director James Cameron, who no longer has a stake after it went bankrupt in 2012. It’s perhaps best known more recently for creating a hologram of deceased rapper Tupac Shakur to perform alongside Snoop Dogg at a California music festival. In a little over two months, the shares soared nine-fold and then abruptly plunged last week to a third of their peak.