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An 1,100% Stock Gain Is Hong Kong’s New Protest Rallying Cry

(Bloomberg) — They’ve occupied Hong Kong’s central business district, marched by the hundreds of thousands through the city’s streets and endured tear gas and pepper spray in pitched battles with riot police.

Now Hong Kong’s pro-democracy supporters are wielding a new protest weapon: their stock-market trading accounts.

To show support for Jimmy Lai, the publisher and outspoken government critic who was arrested Monday under the city’s new national security law, Hongkongers have been piling into shares of his media company, Next Digital Ltd. The result: a more than 1,100% surge in two days that propelled the stock to a seven-year high.

“There are a huge number of retail investors buying,” said Castor Pang, head of research at Core Pacific-Yamaichi. “If you just look at the bid-ask price and the size of single trades, most are super small.”

The record gain, organized via online forums, underscores the challenge Chinese and Hong Kong officials face as they try to stamp out the city’s pro-democracy movement. Residents are turning to alternative forms of protest after policy makers curtailed public demonstrations with social distancing restrictions and the national security legislation.

Buying Next Digital’s stock could in theory help Lai financially, if he or the company decide to sell shares or borrow against holdings. Lai controls 71% of Next Digital, according to data compiled by Bloomberg. The rally has lifted its market value by more than HK$2.6 billion ($335 million).

The company said late Tuesday in a Hong Kong stock exchange filing that it’s “not aware of any reasons” for the volume and price surges.

Lai’s supporters are also finding other ways to show solidarity. Local media reported residents lining up to buy copies of his flagship newspaper Apple Daily this morning. The newspaper said in a Facebook post it increased printing to 550,000 copies on Tuesday due to surging demand, versus around 70,000 two weeks ago.

On major online forums such as LIHKG, posters urged people to continue buying the stock as well as copies of Apple Daily. A post on Next Digital had more than 15 pages of comments as of Tuesday morning. The stock was the third-most traded in Hong Kong on Tuesday after internet firms Tencent Holdings Ltd. and Meituan Dianping.

Along with Lai, a number of executives at the company were arrested on Monday. Next Digital said the incidents aren’t expected to have any material adverse impact on the daily operations of the group, according to a statement to Hong Kong’s stock exchange.

Speculation that Lai will have to sell the company is also helping fuel gains, according to Stevan Tam, research director at Fulbright Securities Ltd.

“Investors should avoid the stock as there’s a high risk of reversal,” Tam said. “I expect the surge to end in one or two days. This is just an individual case and I don’t see Hong Kong’s stock market as increasingly politicized.”

Either way, it appears that the city’s residents have found a new way to protest, one that goes to the core of Hong Kong’s function as a financial center. That’s made some people unhappy.

Mei Xinyu, a columnist and business blogger with 1.3 million followers on Weibo, said in posts on his account that the share buying may be aimed at “staging a protest” against the government. He called for Hong Kong’s bourse operator to take action: “Hong Kong’s capital market should not be a heaven for manipulators, particularly those with political motives!”

Spokesmen for Hong Kong’s stock exchange and the city’s securities regulator declined to comment.

(Adds Next Digital comment in seventh paragraph)

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