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Irrational shares rise of Shanghai DZH
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SHARES of Shanghai DZH Ltd soared to hit the daily upper limit today even after China’s securities regulator halted review of its acquisition plan, triggering confusion among investors and analysts.
Shanghai DZH, a financial information services provider, saw its share price rise by 10 percent to 28.40 yuan (US$4.6). Approximately 5.7 billion yuan worth of shares were changed hands during the trading, accounting for 10 percent of the company’s total market capitalization.
The price surge came after the company received a notice from the China Securities Regulatory Commission yesterday, saying that the regulator has halted review of its plan of asset acquisition, according to a filing to the Shanghai Stock Exchange today.
The statement added insult to injury for Shanghai DZH, which was put under investigation by the top regulator last month over alleged malpractice in information disclosure.
“The news is definitely a negative factor for the company as the acquisition plan is unlikely to be rebooted in the short term,” Zhang Qi, an analyst with Haitong Securities, told Shanghai Daily.
“The price surge doesn’t make sense,” Zhang added.
Li Zhiwei, a retail investor who cleared his holding of shares of Shanghai DZH as soon as the market opened today, said “the irrational rise proves again that it’s difficult to make money from this crazy market with a logical strategy.”
Shanghai DZH in January announced a plan to purchase 100 percent of the equity of Xiangcai Securities for 8.5 billion yuan to create China’s first Internet brokerage. The proposed deal had driven Shanghai DZH’s share price up almost 400 percent this year before the regulatory investigation pared some of its gains.
Shanghai DZH is not the single case of confusion in China’s stock market. Shares of Beijing Baofeng Technology Co Ltd, a streaming and online video company, achieved its 34th daily-limit gain today and rose by 31.2 times since its debut in Shenzhen late March. The company reported a net loss of 3.2 million yuan in the first quarter.
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