The world apparently has a new financial giant.
AMTD Digital Inc., a Hong Kong-based company that listed in New York less than three weeks ago, has risen so much that the combined market value of its Class A and Class B shares exceeded $203 billion as of Wednesday.
That 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 reporting just $25 million in revenue for the year ended April. 2021.
On paper, it is the fifth largest financial company in the world after Berkshire Hathaway Inc., JPMorgan Chase & Co., Bank of America Corp. and Industrial & Commercial Bank of China Ltd.
While those companies have a long list of shareholders, AMTD Digital has a complicated ownership structure that eventually leads to one key name: Calvin Choi, an ex-UBS Group AG banker, who is currently fighting an industry ban in Hong Kong for failing to disclose conflicts. made of importance.
Despite that, Choi was on the floor of the New York Stock Exchange on July 15, ringing the bell as AMTD Digital’s shares were about to begin their upward journey.
They have since risen 14,000% from the initial public offering price of $7.80. Volatile trading continued on Wednesday, with the stock rising a whopping 26% before closing 34%, leading to multiple trading halts along the way.
It’s a mystery why the stock has risen, although some analysts have pointed to the small IPO. It’s also not clear why investment bank AMTD Idea Group, another stock under the AMTD Group umbrella, joined the rally, rising 458% between July 15 and the end of Wednesday.
That stock was the fourth most bought company on Fidelity’s trading platform on Wednesday, despite dropping 11%, indicating it has become a favorite of retail traders.
AMTD Digital did not immediately respond to a request for comment. It said in a statement Tuesday that it monitors the market for any trade anomalies and is not aware of “material circumstances, events or other matters” that could affect the share price.
Choi joined AMTD Group Co in 2016. as chairman and chief executive officer after five years at UBS.
Founded in 2003 with support from Li Ka-shing’s CK Hutchison Holdings Ltd., it is the parent company of AMTD Digital and AMTD Idea Group, which are listed in both Singapore and the US.
AMTD Idea also has well-known donors. Century City International Holdings Ltd., owned by members of the Hong Kong real estate mogul Lo family, has a 5.8% stake in the company. A unit of Morgan Stanley invested in a financing round in 2019.
Choi, a resident of Hong Kong and a 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 owned by him acquired a majority stake in 2015. AMTD Group owns 50.6% of AMTD Idea, which in turn owns 88.7% of AMTD Digital.
AMTD’s Complicated Corporate StructureSource: Bloomberg
Choi has been a fixture at annual financial technology events in Singapore in recent years.
At an event co-hosted by the Monetary Authority of Singapore, AMTD Group was one of the top sponsors for three consecutive years until 2019, when Choi spoke on panels with executives including Bill Winters, Chief Executive Officer of Standard Chartered Plc.
Earlier this year, however, regulators in Hong Kong 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 investor of the AMTD Group that appointed Choi as CEO, turned against him and at one point placed banners in Hong Kong’s central district denouncing him.
Separately, Hindenburg Research blasted AMTD Group. In an April 2021 report on Ebang International Holdings Inc., a China-based crypto firm, the shortseller said his track record as an underwriter was “abnormal”, with 87% of his US IPOs resulting in losses.
Choi admitted in a statement last year that he faced challenges.
“There are people who are jealous and… [are] envious, and those who are cold-blooded and mockers, and malicious, there are slanderers,” he said. “However, entrepreneurs should insist that development is the last word.”
AMTD’s rise is causing those from Hong Kong to New York to speculate about what’s behind the stock’s moves. One explanation is that only a small fraction of the shares are available for trading.
“The stock is highly overvalued,” said Thomas Nip, research analyst at Valuable Capital Ltd. in Hong Kong. “The low free float in the company’s stock means it will be easier for large shareholders to drive the share price up.”
While the recent rally in the US was reminiscent of retail mania last year that stocks of companies including GameStop Corp. As a result, some Reddit and Twitter users seemed stunned by the gains, claiming that the sub-reddit WallStreetBets was behind the moves.
At one point on Tuesday, AMTD Digital’s market value soared above $400 billion, while AMTD Idea shares rose a whopping 520%.
“Given the speed at which it takes off, I have a feeling it will take a nosedive,” said Oktay Kavrak, director of Leverage Shares. “I hope investors make a profit along the way as the inevitable crash will send HKD back to relative obscurity.”
–With help from Matt Turner, Ishika Mookerjee, Jonas Bergman, Chanyaporn Chanjaroen, Cathy Chan and Claire Ballentine.
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