HK’s Next Digital shares soar as trading resumes after Jimmy Lai assets frozen

Shares in jailed tycoon Jimmy Lai’s Next Digital Ltd soared. The first day of trading after a suspension of longer than a week following a freeze in the pro-democracy activist’s assets under the national security law.

The media publisher said it had enough working capital for at least 18 months from April 1 without additional funding from Lai which is its controlling shareholder. When Lai was charged under the security law imposed by China earlier that year, the shares opened 141.9% higher at HK$0.45. And this is the highest since December 2020. Then the gains were extended to HK$0.80. This was during Lai’s first arrest and when the national security police raided the newsroom of his Apple Daily newspaper.

As trade is dominated by retail investors, the stock can be highly volatile. And the its spikes are often a result of buyer’s support for Lai. Wealthy Securities managing director Louis Tse said that there are a lot of investors who are willing to speculate in this stock and it’s crazy. He also said that he doesn’t think that the moves are based on any kind of financial fundaments for the stock.

Hong Kong’s National Security Department had notified Next Digital’s chief executive, Cheung Kim Hung, that Lai was prohibited from dealing in assets, including shares in the listed company and bank accounts of three firms directly or indirectly wholly owned by Lai. In a statement Cheung said that the board does not expect the issue of the notice to have an immediate negative effect on the financial situation or operations of the group. On May 17 Next’s digital shares were suspended.

At the time the group had sufficient working capital for nine to 10 months, said Apple Daily, a pro-democracy tabloid published by Next Digital. As of March 31, its unaudited bank and cash balances amounted to HK$521.4 million, said Next Digital. Lai owns 71.26% stake at Next Digital. The company said that it did not expect the notice from national security authorities to affect the trading volume of the shares in the company.

For taking part in unauthorised assemblies during anti-government protests in Hong Kong in 2019, Lai was sentenced to 14 months in prison. This is the most high-profile arrests made under the security law. He will also hear a sentence for another unauthorised assembly, on Oct. 1, 2019 – China’s national day for which he had pleaded guilty. Lai was a staunch Beijing critic, and now seen as a traitor in China.