Digital Domain Holdings Ltd. became the latest Hong Kong stock to tumble after surging more than 500 percent in a matter of months, following declines in Hanergy Thin Film Power Group Ltd. and Goldin Financial Holdings Ltd.
The company, which owns a majority stake in the visual-effects producer for Hollywood movies including Iron Man 3, sank as much as 61 percent in Hong Kong Wednesday without an immediate explanation. The stock traded 47 percent lower at 1:54 p.m. local time amid record volume. Digital Domain was unaware of any reason for the drop, according to a statement to the bourse.
The shares surged more than 1,500 percent this year through a May 19 peak, valuing the company at about $3.5 billion, or more than Hong Kong builder Hopewell Holdings Ltd. The move follows one-day declines of more than 40 percent in Hanergy and Goldin Financial last month. Speculation in Hong Kong-listed companies has increased since the city established an exchange link with Shanghai, according to shareholder activist David Webb.
“The level of speculative activity in the market varies over time and at the moment it’s very high,” said Webb, the Hong Kong-based founder of Webb-site.com. “It’s partly because of the expected arrival of mainland capital from the through train.”
Digital Domain was nominated for an Oscar for its work on X-Men: Days of Future Past this year, but failed to win. The company had sales of HK$850 million ($110 million) in 2014.
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