(Bloomberg) -- Shares of Sprocomm Intelligence Ltd., a little-known mobile phone and electronics maker, crashed in Hong Kong after a regulatory warning about the firm’s tightly-owned share structure.
The Shenzhen-based company saw its stock plunge 91% within minutes of trading Wednesday after Hong Kong’s Securities and Futures Commission said investors should exercise “extreme caution” when dealing with the stock.
The stock can fluctuate substantially even with a small number of shares traded, the regulator said in a statement Tuesday. Only 26 shareholders held 51.74% of the issued shares of the company as of Nov. 7, it said. Two “substantial shareholders” held 34.5%, it added.
Sprocomm’s topsy-turvy day reminded investors again of the pitfalls in investing in tightly controlled small-cap companies and volatility seen occasionally in the Hong Kong stock market due to the lack of a market-wide circuit breaker system.
The company couldn’t immediately respond to a request seeking comments.
Sprocomm is the eighth company to receive such a warning from the SFC this year. Pak Tak International Ltd., GHW International and Sanergy Group Ltd. are among other firms that saw similar warnings from the regulator.
The slump on Wednesday erased Sprocomm’s gains of more than 470% this year through Friday’s close. It is now down 20% for the year.
©2024 Bloomberg L.P.