http://www.ft.com/cms/s/2/...1e4-a1a0-00144feab7de.html#axzz3VZupiclP
For the past two years, 3.50pm in Hong Kong has been a golden moment in the soaring fortunes of Hanergy Thin Film Power Group, the $35.5bn solar company that has transformed its owner into China’s richest man.
A Financial Times analysis of two years of trading data of Hanergy Thin Film stock — more than 800,000 individual trades on the Hong Kong Stock Exchange — shows that shares consistently surged late in the day, about 10 minutes before the exchange’s close, from the start of 2013 until February this year.
The late-day outperformance of HTF, which has emerged as the world’s biggest solar company by value, is a stark reminder that in stocks trading, timing is everything.
It means that an investor who held HTF shares from the start of trading at 9am to 3.30pm would have lost money — despite the company’s share price rising by 1,168 per cent between January 2013 and February 9 2015. ...
HTF is the listed arm of Hanergy Group, a private Chinese company that has taken a big bet on thin film solar. In less than two years, HTF has surged making it worth more than Twitter or Tesla, the electric carmaker, and its founder Li Hejun, who owns 73 per cent of its shares, China’s richest billionaire.
The FT examined 140m individual trades from top listed companies in Hong Kong to explore the soaring share price of what until last year was a little known small-cap solar company.
Nothing within the data explains why the HTF surge happens. But analysts, who examined the FT findings, as well as the raw data, laid out three possible scenarios: market manipulation by an unknown trader, an algorithmic trading program is at play, or it occurs randomly.
Rajesh Aggarwal, professor of finance at Northeastern University in Boston and an expert on stock market manipulation cases, also reviewed the FT findings and raised the spectre of manipulation: “This is consistent with the stock price having been systematically manipulated over the past couple of years. This pattern of large price increases during the last 10 minutes of trade is extremely unlikely to have occurred randomly.”
Hanergy has publicly addressed the steep rise in its share price over the past few months. The rise has confused analysts following the company and the solar sector itself. HTF previously attributed some of its gains to interest from mainland Chinese buyers — who are able to invest through a new Hong Kong-Shanghai Stock Connect programme. HTF is one of the most high-profile companies to benefit from Stock Connect.
The soaring valuation means HTF is now worth more than all Chinese solar companies combined, ..
In a statement to the Hong Kong bourse this month, Hanergy Group said it was not responsible for the swift rise in the share price.
“Our group, as the shareholder of Hanergy Thin Film, has not committed any so-called ‘propping up’ or taken any action to push up its share price,” the company said.
The Hong Kong Securities and Futures Commission, which regulates the stock market, declined to comment on the findings of the FT investigation.
HTF’s rapid rise to become one of the largest companies on the Hong Kong stock exchange has, in the words of one analyst, made it “too big to ignore”.....
Heavy trading at the end of the day is not unusual, but academic experts on stock market trading who examined the FT’s analysis say the pattern of large gains during the last 10 minutes of trading — with such regularity — is unusual. As Hanergy founder Mr Li holds 73 per cent of the HTF’s shares, this means that the amount available to trade freely on the market, the so-called free float, is highly constricted.
Eric Budish, associate professor of economics at the University of Chicago Booth School and an expert on financial markets, says it was highly unlikely that the late day price gains had occurred by random chance. He examined the raw data from the FT.
Carole Comerton-Forde, professor of finance at the University of Melbourne,....“If there is a company where there is a limited free float this will mean it is thinly traded, and there is plenty of empirical evidence that suggests these stocks are more susceptible to manipulation.”
Mr Aggarwal also highlights the vulnerability of companies with a small free float to be manipulated by placing large but unfilled buy orders at the end of each trading day to artificially inflate the price of a particular stock. |
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