The Securities and Futures Commission has flagged 13 cases of high shareholding concentration this year, warning of potential price volatility in small-cap stocks.
Key facts
- •The SFC identified 13 cases of high shareholding concentration as of August.
- •The 2024 figure represents a 30 per cent increase from the previous year and a twelvefold jump from 2023.
- •Companies flagged by the regulator have market values between HK$600 million and HK$9 billion.
- •Desun Real Estate Investment Services Group had 99.53 per cent of its shares held by 19 shareholders as of July 21.
Hong Kong's Securities and Futures Commission (SFC) has increased its scrutiny of companies with highly concentrated shareholdings. As of August, the regulator identified 13 such cases on the Hong Kong stock exchange, indicating a significant rise in activity compared to previous years.
By the numbers
Regulatory Concerns and Market Impact
The SFC warned that high ownership concentration among a small group of shareholders can lead to sharp price swings, even during small trading volumes. The companies cited by the regulator are primarily small- and mid-cap stocks with market values ranging from HK$600 million to HK$9 billion.
Case Example and Market Context
In a recent example, the SFC reported that the controlling shareholder and 18 other shareholders of the Sichuan-based Desun Real Estate Investment Services Group held a combined 99.53 per cent of the company's total issued shares as of July 21. Andrew Lam, managing director at BDO, noted that small- and mid-cap stocks often suffer from light daily trading, which allows limited capital to absorb most floating shares.
Timeline
- 2023The regulator recorded a baseline of share concentration cases.
- July 21Desun Real Estate Investment Services Group reached a 99.53 per cent share concentration.
- AugustThe SFC reached a total of 13 identified cases of high shareholding concentration for the year.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by South China Morning Post.
