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Chalk up another big loss for a single stock on Hong Kong’s stock market: shares in GME Group fell almost 85 per cent on Tuesday following the end of a month-long trading freeze.
Shares in the public works sub-contractor had been frozen on the afternoon of their February 22 debut on the Hong Kong stock exchange’s small-cap board. The Securities and Futures Commission froze the stock when prices jumped 542.6 per cent that day to HK$3.47 on concerns that an open market for the shares did not exist.
The company completed a placement of 588,000 shares during the halt, according to a stock exchange filing made by the company on Monday.
The placement to third parties was in line with a proposal from the company meant to lower controlling shareholders’ stake in the company to 55 per cent in order to satisfy listing rules. Those rules require an open market in the trading of shares listed on the Growth Enterprise Market for smaller listed companies.
Shares fell as much as 84.7 per cent on Tuesday and were still down 84.2 per cent in late morning trade at HK$0.55.
Hong Kong’s market has been in the spotlight since Friday when shares of China Huishan Dairy dropped by about 90 per cent in the space of an hour. The Hong Kong Stock Exchange last year introduced a so-called volatility control mechanism to limit extreme price volatility, but this only applies to individual securities in the Hang Seng benchmark and the Hang Seng China Enterprises Index (which tracks mainland companies listed in Hong Kong). Small cap stocks in the territory are not governed by the VCM and its imposition of cooling-off periods.