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This small firm beats Goldman Sachs and other large companies with 14,000% profit

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Clearly, the world has a new financial giant.

Clearly, the world has a new financial giant.

AMTD Digital Inc., a Hong Kong-based company that listed in New York less than three weeks ago, has grown so much that the combined market value of its Class A and Class B shares is more than $203 billion as of Wednesday’s close. was.

That means the firm — which develops digital businesses including financial services — exceeds Wells Fargo & Co., Morgan Stanley and Goldman Sachs Group Inc., despite reporting only $25 million in revenue for the year ended April 2021. is of value.

At least on paper, that makes it the fifth largest financial company in the world, leaving behind Berkshire Hathaway Inc., JPMorgan Chase & Company, Bank of America Corp. and Industrial and Commercial Bank of China Ltd.

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While those firms have a long list of shareholders, AMTD Digital has a complex ownership structure that eventually led to a prominent name: Calvin Choi, an ex-UBS Group AG banker who is currently struggling to disclose. Industry in Hong Kong is fighting sanctions for failing. Of interest.

Despite this, Choi was on the floor of the New York Stock Exchange on July 15, ringing the bell as AMTD Digital’s shares were about to begin their upward journey.

They are up 14,000% from the initial public offering price of $7.80. Volatile trading continued on Wednesday, with the stock rising as much as 26% before falling 34%, triggering several trading halts along the way.

It’s a mystery why the stock has risen, although some analysts point to its small public float. It’s also unclear why investment bank AMTD Idea Group, another stock under the AMTD Group umbrella, joined the rally, climbing 458% between July 15 and Wednesday’s close.

The stock was the fourth most bought on Fidelity’s trading platform on Wednesday despite a 11% drop, indicating it has become a favorite of retail traders.

AMTD Digital did not immediately respond to a request for comment. It said in a statement Tuesday that it is monitoring the market for any trading abnormalities and is not aware of any “material circumstances, events, nor other matters” that could affect the share price. Huh.

well-known supporters

After spending five years at UBS, Choi joined AMTD Group Company as President and Chief Executive Officer in 2016.

Created in 2003 with the backing of Lee Ka-shing’s CK Hutchison Holdings Ltd., it is the parent of AMTD Digital and the AMTD Idea Group, which are listed in both Singapore and the US.

There are also well-known supporters of AMTD Idea. Century City International Holdings Limited, owned by members of Hong Kong real estate tycoon Low family, holds a 5.8% stake in the firm. A unit of Morgan Stanley invested in a funding round in 2019.

Choi, a Hong Kong native and Canadian citizen who studied accounting at the University of Waterloo, is the sole owner of a vehicle that controls 32.5% of AMTD Group.

His father is also involved after a company that acquired his majority stake in 2015. AMTD Group owns 50.6% of AMTD Idea, which in turn owns 88.7% of AMTD Digital.

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AMTD’s Complex Corporate Structure Source: Bloomberg

Choi has been a fixture at annual fintech events in Singapore in recent years.

At an event co-organised by the Monetary Authority of Singapore, AMTD Group was one of the largest sponsors for three consecutive years until 2019, when Choi spoke on the panel with executives including Standard Chartered plc chief executive Bill Winters.

Earlier this year, however, Hong Kong regulators banned Choi from the securities industry for two years for failing to disclose a conflict of interest in transactions involving UBS. He is appealing the decision.

China Minsheng Investment Group Corp., an AMTD Group investor who installed Choi as CEO, turned against him and at one point put up banners condemning him in Hong Kong’s Central District.

Separately, Hindenburg Research has disbanded the AMTD group. In an April 2021 report on Aibang International Holdings Inc., a Chinese crypto company, the short seller said that its track record as an underwriter was “worthless”, with 87% of its US IPOs resulting in losses.

Choi acknowledged in a statement last year that he faced challenges.

“There are people who are jealous and [are] The envious, and those who scoff and scoff, and are spiteful, are blasphemers,” he said. “However, entrepreneurs should emphasize that growth is the last word.”

The AMTD surge has people from Hong Kong to New York speculating on what, if anything, is behind the move in the stock. One explanation is that only a small fraction of its shares are available for trading.

“The stock is highly priced,” said Thomas Nipp, a research analyst at Valuable Capital Ltd in Hong Kong. “The low free float in the company’s shares means it will be easier for large shareholders to raise the stock price.”

While the recent rally in the US is reminiscent of the retail trade frenzy that soared stocks of companies including Gamestop Corp last year, some Reddit and Twitter users appeared baffled by the gains, denouncing claims that the subreddit Wallstreetbets was following the move. was behind.

AMTD Digital’s market cap at one point exceeded $400 billion on Tuesday, while AMTD Idea shares rose 520%.

“Given the pace of its climb, I think it will fail,” said Okte Kavrak, director of Leverage Shares. “I expect investors to follow the path of profit as the inevitable crash will send HKD back into relative obscurity.”

—With assistance from Matt Turner, Ishika Mukherjee, Jonas Bergman, Chanyaporn Chanjaroen, Kathy Chan and Claire Ballantyne.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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