Trigger fuse multiple times
In the 16 trading days since its listing on July 15, AMTD Digital’s share price rose from US$7.8 to around US$880 after the market opened on August 5. During the period, it soared to US$2,555.3 per share, with a maximum increase of 327.6 times. It once exceeded $470 billion and surpassed Alibaba to become the second largest market capitalization stock, and became the “third largest financial company in the world” after Berkshire Hathaway and JPMorgan Chase.
Since August 3, AMTD Digital has plummeted for 2 consecutive days, down 34.48% and 27.27% respectively.
As of the close of trading on August 6, AMTD Digital’s share price was reported at US$721.13, down 9.85%, with a total market value of US$133.4 billion, which has dropped by about US$340 billion from the peak of US$472.6 billion.
Sophie Lund Yates, chief equity analyst at Hargreaves Lansdown, believes there is no quantifiable reason for the trajectories behind this unusual share price trading behavior, as these behaviors are driven by emotions, which are based on a limited amount of information.
Unlike A-shares that set a 10% or 20% price limit for individual stocks, U.S. stocks do not have a price limit system for individual stocks, but a circuit breaker will be triggered during the session. AMTD Digital has also triggered the circuit breaker mechanism many times in the previous skyrocketing and falling.
According to Yan Zhaojun, a strategic analyst at Zhongtai International, according to the latest regulations of the US Securities and Exchange Commission (SEC), in addition to the circuit breaker mechanism for the broader stock market, there is also a mechanism to “limit the upper and lower limits of price fluctuations”. If the trading price of a single stock rises or falls by more than 10% within 5 minutes, trading needs to be suspended. If the trading price of the stock does not return to the specified “price fluctuation range” within 15 seconds, trading will be suspended for 5 minutes. For stocks in the S&P 500 and Russell 1000 and 430 exchange-traded products priced above $3, the SEC-specified “price range” is a 5% increase or decrease, with other flows trading below $3 The “price volatility range” of weaker stocks was relaxed to 10%.
In addition, on August 5, AMTD Digital also announced that the underwriters of its mid-July IPO had decided to exercise its full greenshoe option to purchase up to 2.4 million additional U.S. shares at the listing price of $7.80 per share. Depositary Shares. AMTD Digital said that it expects the issuance of additional shares to be completed before August 8.
Who caused all this?
The involvement of such a huge amount of capital in hyping an unknown company inevitably reminds people of the power of retail investors to form a group. But Citron Research, a subsidiary of Andrew Left, tweeted: “AMTD Digital is not a meme stock.”
The agency believes that although it is foolish to determine the price, it only traded 339,000 shares on August 2, and did not arouse the imagination of retail investors like Game Stop. “Obviously, there was no securities lending, and the fees, if any, were staggeringly high. The SEC doesn’t regulate market capitalization.”
The so-called “meme stocks” refer to stocks that have become trading hot spots because of Internet trends. Although Citron Research has publicly stated that AMTD International is not a group stock for retail investors, according to data from Quiver Quantitative, an alternative data provider that tracks Reddit group activity, AMTD Digital is indeed the second most popular among Reddit-owned WallStreetBets in the past 24 hours. ‘s stock symbol.
Intense speculation by retail investors has once again rattled many on Wall Street.
Former SEC Chairman Jay Clayton said: “As we’ve learned over the past two years, events like this create what I would say profit opportunities, but especially for our retail investors, the risk of loss is high. “
Prominent big bear Jim Chanos also tweeted his frustration at the “mania”: “So we’re all ignoring the $400 billion in MEME stock here? We did hold congressional hearings for GME and AMC’s $30 billion run. Yes, but not today.”
Previously, the sharp fluctuations in “meme” stocks such as Game Station caused the market to urge the SEC to reform the stock trading rules.
According to the “Wall Street Journal” report on June 8, the SEC plans to significantly revise the regulatory rules involving the operation of the stock market, or may significantly change the operation mode of the US stock market.
The report quoted sources as saying that SEC staff in the past few weeks have begun to study major changes to stock market regulations, and pointed out that SEC Chairman Gary Gensler will deliver a speech mentioning the relevant changes. The sources pointed out that the proposed amendments include requiring securities firms that execute a large number of individual investor orders to use a bidding method for high-frequency traders to bid for the batch of orders, in order to reduce the level of commissions that individual investors must pay.
However, this reform has not yet been followed.
“Comparatively speaking, the U.S. stock market has a large amount of capital and a wide variety of transactions, market players can make more use of their own advantages and capabilities to adjust, and the market system has a stronger ability to bind participants. At the same time, U.S. laws and regulations The system will also be more strict with listed companies, law firms, accounting firms, etc. afterwards.” Chen Xin, a professor at the Shanghai Advanced Institute of Finance, Shanghai Jiaotong University, told The Paper that after the underlying legal system was set up in the US stock market, It mainly relies on market forces to self-adjust, rather than relying on regulatory and administrative means to intervene in real time. Overall, U.S. markets price stocks more efficiently.
Tian Shichan, founder and CEO of GuruFocus, told The Paper: “I think this is a market behavior (referring to hyping up stocks similar to Shangcheng Digital), and it has little impact on the entire stock market, accounting for only a small percentage of the market. The proportion is limited to some small companies. As long as the information is transparent and openly traded, there is no need for mandatory supervision.”