Next Digital Soars in Hong Kong After Jimmy Lai’s Arrest
(Bloomberg) -- Shares of the media company founded by Hong Kong government critic Jimmy Lai surged on Friday, a day after the stock was halted following his detention on charges related to an earlier arrest under the China-drafted national security law.
Next Digital Ltd. jumped as much as 107% before paring to close the day up 20%. The stock briefly saw its biggest gain since the days following Lai’s August arrest. Back then, it surged 1,100% in two sessions to a seven-year high before wiping out those gains.
“It’s purely speculative,” said Kenny Wen, an analyst at Everbright Sun Hung Kai Co. Ltd., of Friday’s gains. “The stock is too volatile and the risk of reversion is very high, as we saw in August. Things can turn around very quickly and investors will lose out if they can’t pull out in time.”
Hong Kong police in October arrested more than a dozen people in connection with the summer surge on suspicion of the use of illegal funds and conspiracy to defraud. Police said one of the people had links to organized crime, and six were unemployed.
Lai, 73, was this week denied bail on the new charges related to the August arrest, which could potentially keep him behind bars for months as he fights the allegations.
The publisher and his fellow executives were charged with violating the lease terms of the office park housing Next Digital’s headquarters by basing a family office there to manage his personal finances. He wasn’t immediately charged with potentially more serious allegations of foreign collusion under the security law, which in August prompted his arrest and a dramatic raid of the newsroom of Next Media’s Apple Daily newspaper.
China’s crackdown on Hong Kong dissent has prompted international condemnation, and the U.S. has hit Chief Executive Carrie Lam and several other officials responsible for the city with sanctions. Lam said she was collecting “piles of cash” at home because the financial measures were barring her from basic banking services.
Hong Kong authorities have moved quickly to employ the sweeping legislation, which carries sentences as long as life in prison, since it was imposed by China without local debate in June. The police unit tasked with enforcing the measure has so far arrested 32 people, most for allegations related to slogans, banners or Internet posts deemed to be secessionist or seditious.
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