The shares of Jiayuan International Group Ltd. plunged 89% during the Asian session on 17th january, which seems to have been triggered by a margin call. This is a record drop for a company that has a market capitalization of more than a billion dollars this year.
The news signaled potential new stock market problems in Hong Kong.
The case is caused by the launch of a large volume of shares for sale at a low volume of trade. The company's chairman has used his shares as a loan pledge. This situation is a further signal for Hong Kong stock exchanges to increase transparency as the current law does not oblige the lender to declare information on such a stake in a pledge against credit.
The company wiped out $ 3.4 billion in minutes on January 17, with no news to cause such a movement. Company chairman Shum Tin Ching has signed a document that same day that he is not aware of the cause of the downturn.
Source: Bloomberg Finance L.P.
Chart: Used with permission of Bloomberg Finance L.P.
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