On Tuesday (27 Jun), the share prices of many market manipulators plunged as if going through a market crash. Meanwhile, there are people betting on a rebound amidst the market chaos, and we even see many people happily sharing live market “tips” in online discussion groups.
Indeed, there are a number of stocks whose prices rebounded many folds since the stock market plunge on Tuesday.
China Investment and Finance Group Ltd (1226.HK) rebounded by 6.75x, QPL International Holdings Ltd (243.HK) by 3.8x, AMCO United Holding Ltd (630.HK) by 3.77x, and China Properties Investment Holdings Ltd (736.HK) by 3.3x. Both China e-Wallet Payment Group Ltd (802.HK) and SEEC Media Group Ltd (205.HK) rebounded by 3.2x.
How to pick rebound stocks?
How should one identify and pick rebound stocks when so many stocks have crashed? Some shared their experiences in the discussion groups—choose stocks whose market values have fallen below HK$100 million, as they might be speculated just like shell corporation stocks.
However, note that despite the sharp fall in their share price, some stocks still cost more than they had cost before the previous round of speculation. An example is Luen Wong Group Holdings Ltd (8217.HK)—its share price fell by 89 percent on Tuesday and closed at HK$1.06, but when the company was listed last year, its share was only priced at HK$0.26.
On Tuesday, when the market was in chaos, some attributed the reason to certain market manipulator(s) being liquidated due to cash flow problems.
Some also said that Hong Kong Exchanges and Clearing (388.HK) is ordering low market value companies that have not registered turnover for a long time to delist. But HKEx issued a statement at around 2pm denying that it would make such a move.
Hence, it is obvious that people who spread such rumours had the aim of sieving out and driving down penny stocks which had registered no turnover for a long time. When that happens, these rumour-spreaders would be able to buy at a bargain.
Stay cautious amid flurry of news
With information technology being so developed nowadays, we can join timely online discussions and exchange “tips” on-the-go through platforms like WhatsApp and WeChat.
Fortunately, retail investors were not too severely hurt by the stock plunge on Tuesday. The reason is that it’s been quite a while since people have speculated in market manipulator stocks, shell company stocks, and penny stocks.
Those who still hold on to the abovementioned stocks have already incurred heavy losses earlier on, and more losses on top of that would not mean much to them anymore.