Chinese small-cap stocks surge in meme-like rally
28/04/2023 15:29
By Chibuike Oguh and Bansari Mayur Kamdar
NEW YORK, April 28 (Reuters) - The U.S.-listed shares of
small and micro-cap Chinese firms soared on Friday, reminiscent
of meme-like rallies last summer that were underpinned by strong
demand from retail investors.
So-called meme rallies are unusual share price gains, driven
by social media sites patronized by individual traders.
Online brokerage firm Top Financial Group Ltd TOP.O spiked
255% to $71 per share after markets opened on Friday, continuing
the trajectory seen during premarket trading.
The stock had nearly tripled to $20 per share in regular
hours on Thursday, giving it a market capitalization of $701
million.
Magic Empire Global Ltd MEGL.O , a provider of financial
advisory and underwriting services, jumped 265% to $3.38 per
share. It had closed at $0.93, shedding 7.2%, with a market
capitalization of $18.8 million during regular market hours on
Thursday.
Both Top Financial and Magic Empire are currently two of the
most watched stocks on Stocktwits, a website that is popular
among retail investors.
Top KingWin Ltd TCJH.O , a provider of consulting and
advisory services, gained 59%, and U Power Ltd UCAR.O , which
is launching automated battery-swapping stations for electric
vehicles in China, is up 15%. Both firms listed on the Nasdaq
last week after pricing their respective initial public
offerings.
Nasdaq in October put the brakes on IPO preparations of at
least four small Chinese companies while it was investigating
short-lived stock rallies of such firms following their debuts,
according to lawyers and bankers who work on such stock
launches.
U.S. exchanges and the Financial Industry Regulatory
Authority (FINRA) in November warned about a heightened threat
of fraud mostly involving the initial public offerings of small
companies, driven in part by a social media-driven pump-and-dump
scheme called "pig butchering."
(Reporting by Chibuike Oguh in New York and Bansari Mayur
Kamdar in Bengaluru
Additional reporting by Medha Singh; Editing by Lance Tupper and
Sharon Singleton)
((Chibuike.Oguh@thomsonreuters.com; +332-219-1834; Reuters
Messaging: chibuike.oguh.thomsonreuters.com@reuters.net))