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One of the world’s most successful investors is cutting ties with the parent of AMTD Digital, whose 14,000% stock-market rally in a matter of weeks has raised eyebrows across Wall Street.
Billionaire Li Ka-shing’s CK Group is selling its remaining stake in AMTD, according to a statement on Thursday. Its unit AMTD Digital, a formerly obscure Hong Kong financial-services firm, vaulted into the spotlight this month after its market value inexplicably surpassed those of global giants including Goldman Sachs and Wells Fargo.
CK Group currently holds less than 4% of AMTD and is not invested directly in AMTD Digital. Li’s conglomerate, which was a founding member of AMTD in 2003 but sold most of its shares almost a decade ago, said it has no representative on AMTD’s board and is not involved in its operations.
Analysts have described the gains in AMTD Digital as unjustified after its market value exceeded $400bn at one point this week. Even the company itself — which reported a comparably minuscule $25m in revenue for the year ended April 2021 — has said it doesn’t know of any “material” events that should be affecting the stock price.
The eye-popping gains have heightened scrutiny of Calvin Choi, AMTD Group’s chairman, CEO and major shareholder. The former UBS Group AG banker is currently fighting an industry ban in Hong Kong for failing to disclose conflicts of interest.
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 AMTD, which owns 50.6% of boutique investment bank AMTD Idea Group, which in turn owns 88.7% of AMTD Digital.
While AMTD Digital’s rally is reminiscent of the retail trading mania that drove up shares of companies including GameStop in 2021, some Reddit and Twitter users appeared baffled by the gains, dismissing claims that the sub-reddit WallStreetBets was behind the moves. AMTD Digital, which trades under the ticker HKD, slumped 34% on Wednesday, snapping a manic six-day rally.
AMTD Idea shares fell 23% in pre-market trading on Thursday.
“Given the speed of its ascent, I have a feeling this one will nosedive,” Oktay Kavrak, director at Leverage Shares, said before CK Group’s statement. “I hope investors take profits along the way as the inevitable crash will send HKD back to relative obscurity.”
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.