Wild Rallies are Back for Tiny Chinese Stocks That Just Debuted

The dizzying rallies that puzzled traders and once sent some little-known Chinese stocks to sky-high market values are back.

(Bloomberg) — The dizzying rallies that puzzled traders and once sent some little-known Chinese stocks to sky-high market values are back.

A slew of small- and micro-cap Chinese stocks soared in US premarket trading Friday, led by online brokerage Top Financial Group Ltd., which at one point traded at over 10 times the prior session close.

Wild moves aren’t limited to Top Financial. Shares of Magic Empire Global Ltd., a Hong Kong-based financial services firm with just nine employees, rallied over 400% from Thursday’s record low closing level of less than $1 a share. Golden Sun Education Group Ltd., a school operator and education service provider, jumped as much as 108%. All these companies were listed on US exchanges within the past 12 months.

Such mysterious rallies have occurred in the past. In August, financial firm AMTD Digital Inc. surged more than 32,000% to briefly surpass Goldman Sachs Group Inc. by market value. As of Thursday, the stock has tumbled more than 99% from its intraday peak in August. It traded 18% higher in Friday’s premarket session.

These outsized gains have attracted attention of Nasdaq Inc., which stepped up scrutiny of initial public offerings by small-cap companies last year. Securities and Exchange Commission Chair Gary Gensler said in August that the agency keeps tabs on sudden stock swings, but declined to comment on eye-popping gains in AMTD Digital and Magic Empire.

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