The world, apparently, has a new financial giant.
AMTD Digital Inc., a Hong Kong-based company listed in New York less than three weeks ago, jumped so high that the combined market value of its Class A and Class B shares was over $203 billion. at the close of Wednesday.
It means the company – which develops digital businesses including financial services – is worth more than Wells Fargo & Co., Morgan Stanley and Goldman Sachs Group Inc., despite having just $25 million in revenue for the financial year ended in April 2021.
At least on paper, that makes it the fifth largest financial company in the world, behind Berkshire Hathaway Inc., JPMorgan Chase & Co., Bank of America Corp. and Industrial & Commercial Bank of China Ltd.
While these companies have a long list of shareholders, AMTD Digital has a convoluted ownership structure that ultimately leads to a key name: Calvin Choi, a former UBS Group AG banker, who is currently fighting an industry ban. in Hong Kong for failing to disclose conflicts. of interest.
Despite this, Choi was on the floor of the New York Stock Exchange on July 15, ringing the bell as shares of AMDD Digital were about to begin their ascent.
They have since risen 14,000% from the initial public offering price of $7.80. Volatile trading continued on Wednesday, with the stock surging as high as 26% before closing down 34%, triggering multiple trading stops along the way.
It’s a mystery why the stock jumped, although some analysts pointed to its tiny public float. It’s also unclear why investment bank AMTD Idea Group, another stock under the AMTD Group umbrella, joined the rally, climbing 458% between July 15 and Wednesday’s close.
The stock was the fourth most-bought company on Fidelity’s trading platform on Wednesday despite falling 11%, indicating it has become a favorite among retail traders.
AMTD Digital did not immediately respond to a request for comment. It said in a statement on Tuesday that it was monitoring the market for any trading anomalies and was not aware of any “material circumstances, events or other matters” that could affect the stock price.
Choi joined AMTD Group Co. in 2016 as Chairman and CEO after spending five years at UBS.
Created in 2003 with the support of CK Hutchison Holdings Ltd. of Li Ka-shing, it is the parent company of AMTD Digital and AMTD Idea Group, listed in both Singapore and the United States.
AMTD Idea also has well-known backers. Century City International Holdings Ltd., owned by members of the Lo family, the Hong Kong real estate magnate, has a 5.8% stake in the company. A Morgan Stanley unit invested in a funding round in 2019.
Choi, a Hong Kong native and Canadian citizen who studied accounting at the University of Waterloo, is the sole owner of a vehicle that controls 32.5% of the AMTD group.
His father is also involved after a company he owns acquired a majority stake in 2015. AMTD Group owns 50.6% of AMTD Idea, which in turn owns 88.7% of AMTD Digital.
AMDD’s convoluted corporate structure Source: Bloomberg
Choi has been a fixture at annual fintech events in Singapore for the past few years.
At an event co-hosted by the Monetary Authority of Singapore, the AMTD Group was among the top sponsors for three consecutive years until 2019, when Choi spoke at panels with leaders including the CEO of Standard Chartered Plc, Bill Winters.
Earlier this year, however, Hong Kong regulators banned Choi from the securities industry for two years for failing to disclose conflicts of interest in transactions he worked on at UBS. He is appealing the decision.
China Minsheng Investment Group Corp., an AMTD Group investor that installed Choi as CEO, turned on him and at one point put up banners in Hong Kong’s central district denouncing him.
Furthermore, Hindenburg Research blasted the AMTD group. In an April 2021 report on Ebang International Holdings Inc., a China-based crypto firm, the short seller said its track record as an underwriter was “appalling,” with 87% of its IPOs in the states. States resulting in losses.
Choi admitted in a statement last year that he had struggled.
“There are those who envy and [are] jealous, and those who are cold-eyed and mocking, and malicious, there are slanderers,” he said. “However, entrepreneurs must insist that development is the last word.”
The AMTD surge has those from Hong Kong to New York speculating on what, if anything, is behind the stock’s moves. One explanation is that only a small portion of its shares are available for trading.
“The stock is significantly overvalued,” said Thomas Nip, research analyst at Valuable Capital Ltd. in Hong Kong. “The company’s low free float means it will be easier for large shareholders to drive up the share price.”
While the recent rally in the U.S. was reminiscent of the retail mania that drove shares of companies including GameStop Corp. higher. Last year, some Reddit and Twitter users appeared taken aback by the winnings, decrying claims that subreddit WallStreetBets was behind the moves. .
At one point on Tuesday, AMD Digital’s market value topped $400 billion, while AMTD Idea’s shares jumped 520%.
“Given the speed of its rise, I have a feeling this one is going to take a nosedive,” said Oktay Kavrak, director of Leverage Shares. “Hopefully investors will take profits along the way as the inevitable crash will send HKD back into relative obscurity.”
–With help from Matt Turner, Ishika Mookerjee, Jonas Bergman, Chanyaporn Chanjaroen, Cathy Chan and Claire Ballentine.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)