China's Next Digital share price soared above 330%; Here's What is Brewing

Summary

• Lately, numerous technology companies have witnessed negative consequences from the escalated US-China tensions over trade, politics, and security.
• However, investors have showered surprising support for Next Digital, whose share price surged by 331.37% to settle at HK$100 on 11 August 2020 and rose by 183.33% to HK$0.255 on 10 August 2020.
• The inexplicable upsurge came on the heels of the arrest of Hong Kong media tycoon Jimmy Lai Chee-ying, as well as his two sons and four senior executives of Next Digital over accusations of conspiracy with foreign forces.
• The peculiar surge in the share price is believed to be backed by strong support from the social media posts that had urged investors to buy shares of Next Digital; also, there are speculations by few of the traders and analysts that the Company could potentially sell its listed entity as a ‘shell’ for other companies to purchase primarily to attain a back-door listing.

The tensions blazing between the US and China during pandemic, trade, national security and economic damage have taken a toll on the technology companies, which led to plunged share prices over a couple of days period.

Furthermore, it seems that Hong Kong stocks are bearing the brunt of flaring tensions between the US and China concerning jeopardising of national security.

Numerous tech entities have witnessed negative repercussions from the host of measures taken by China and the US amid their fuelled war such as Hong Kong’s new national security law; twin executive order issued for a ban on the US companies transactions with Chinese tech companies, ByteDance that owns TikTok and Tencent that owns WeChat; and excluding of Chinese vendors from core 5G network and many more.

Do read; Trump Cuts US ties with ByteDance and Tencent

However, investors have exhibited some unexpected support for Next Digital Ltd (HKG:0282) whose shares skyrocketed by 331.37% to settle at HK$1.100 on 11 August 2020.

Furthermore, on 10 August 2020, Next Digital closed the day’s trade at HK$0.255, registering a surge of 183.33%.

The parent company of Hong Kong newspaper Apple Daily, Next Digital witnessed a stilted turnaround for its stock in a roller-coaster day during trading session on 10 August 2020, the stock price rebounded after falling to HK$0.075, following the news of the arrest of the founder of the popular tabloid Apple Daily, Jimmy Lai Chee-ying.

The arrest of Hong Kong media tycoon Jimmy Lai Chee-ying was followed by the arrest of his two sons and four executives of Next Digital. Mr. Lai was detained over allegations of collusion with foreign forces (one of the new national security offences under the national security law imposed by Beijing on the city effective from the end of June 2020), and operational fraud earmarking the Next Digital publishing group.

Several Investors were left scratching their heads over the probable cause behind the abrupt soared share price.

This mysterious increase in the share price is believed to be backed by strong support from the social media posts that had urged investors to buy shares of Next Digital.

Furthermore, this surge in the share price also signalled towards the fact that investors were speculating that Next Digital could probably sell off its listed entity as a ‘shell’ for other companies to purchase primarily to accomplish a back-door listing.

The high-profile arrest of a democratic activist against China’s increasingly unfolding new powers in Hong Kong, Mr Jimmy Lai is believed to be one of the most notable and aggressive actions taken under the law (that curtails protest and freedom of speech) so far.

His custody was further followed by ~200 police officers rummaging through desks, and gathering loads of documents to be taken away, as recorded by the paper’s enraged workforce.

Furthermore, this sweep of arrests clearly signals the fact that China wants to fully utilise its new national security regime to suppress free expression, as well as weaken pro-democracy movement of Hong Kong.

Read on!

A 71-year-old activist who is an owner of the pro-democratic newspaper Apple Daily and publishing company, Next Digital had been writing and publishing columns criticising China and Chinese leadership along with being a vital part of Hong Kong’s pro-democracy demonstrations.

Notably, Mr Jimmy Lai was already arrested twice before 10 August in February 2020 concerning illegal assembly charges for earlier protests.

Let us quickly apprise ourselves with the new security law.

The new national security law was passed in Hong Kong on 30 June 2020.

The Beijing government had passed a new security law for Hong Kong on 30 June 2020, making it easier to penalise protesters and diminish Hong Kong’s self-rule.

However, the Chinese government believed that the regime would flare up stability.

Furthermore, the new law criminalises any act that comprises of any act of secession (escaping from the nation); subversion (subvert the central government’s power/authority); terrorism (usage of fear or violence against individuals) and collusion with outer forces.