Home>News>Economy>Investors mistakenly started buying shares of a Chinese company, accidentally increasing its value by 395%

Investors mistakenly started buying shares of a Chinese company, accidentally increasing its value by 395%

Economy
02.06.2021
57
Investors mistakenly started buying shares of a Chinese company, accidentally increasing its value by 395%

Securities confirming the ownership of the Chinese platform shares for online real estate trading, which are traded on the Nasdaq exchange under the DUO ticker, have skyrocketed in price 13 times. On June 9, the securities were traded at $10, and later raised over $129.04. By the close of trading day, the price was $47.06, which is 395% more expensive than the previous day. Due to a sharp boost, the company’s capitalization reached $4 billion.

There are no clear reasons for that, but they may lie in the name of the organization itself — Fangdd Network Group, which resembles an acronym made up of the names of the five most successful companies in the IT industry — Facebook, Apple, Amazon, Netflix and Google. On the same day, the Nasdaq index, where the listed organizations are traded, soared over 10,000 points and thereby updated its all-time high. Amazon, Facebook and Apple also rose in price. Investors might have thought the Chinese stock would follow the same path.

According to Bloomberg, about fifteen thousand users of the Robinhood service, which allows investors to trade on the exchange without commissions, added Fangdd shares to their portfolios within a week. Agency analysts compared this situation to the dot-com bubble of 2001, when a sharp spike in Internet companies led to the collapse of the Nasdaq index.  It also grew by leaps and bounds from 1000 points in 1996 to 5048 by 2000.

Benn Eifert, partner at QVR Advisors, said the market had never seen such active participation of retail investors before. This is primarily due to the popularity of the Robinhood platform. Thus, sometimes strange phenomena occur on the stock exchange.

However, it is difficult to call the actions of retail investors wrong or manipulative, as most of their recent deals have been profitable. The most active growth today is shown by securities that collapsed in February and March. It is also worth noting that retail investors tend to buy securities when they fall, which, given a low refinancing rate, is a completely logical and correct decision.

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