A group of Hong Kong stocks have lost more than $6bn in a series of mysterious plunges that left the worst of the fallers down 95%, and 13 of them down more than 50%. According to the Financial Times, the cause of the collective plunges was not immediately clear, but they are the latest in a series of sudden stock swings in the city that have prompted warnings about the dangers of stocks with small free-floats. One likely trigger could have been a margin call. Pledging shares for loans is common and the dumping of share collateral held by lenders has caused more than one dramatic collapse – most recently the 90% fall in Huishan Dairy in less than an hour in March after a lender dumped collateral. Worst of the bunch was China Jicheng Holdings, an umbrella maker, which was down 94.3%. GreaterChina Professional Services was next worst, down 93.4%.
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