Pro-Beijing newspapers have accused Hong Kong media company Next Digital, owned by democracy campaigner Jimmy Lai, of “false trading” after investors sent the share price rocketing in protest at his arrest and at a police raid on the Apple Daily newsroom.

Several pro-Beijing media outlets including Oriental Daily and state-run Wen Wei Po cited anonymous market sources as saying it was “suspicious” that Monday’s arrest of Lai – which the sources deemed as negative news – led to a jump in the share price instead of a plunge.

Jimmy Lai (right). Photo: KH/United Social Press.

Shares in the Apple Daily publisher soared by over 1,000 per cent to HK$1.960 on Tuesday, boosting the company’s valuation to over HK$2.6 billion as netizens urged Hongkongers to support the firm. The price dipped back to HK$0.400 as the market closed on Friday.

The sources questioned where the capital came from and claimed the purchases were not made by “regular investors.” They alleged there was a “transfer of benefits,” covered up by a high turnover.

Lawmaker Christopher Cheung representing the financial services constituency told Wen Wei Po that the “key opinion leaders” who encouraged people to buy shares could “do people a mischief.” He also accused some unidentified people of having a plan to jack up the price.

Apple Daily columnist Stanley Wong, who has over 129,000 followers on Facebook, was among the investors. He said he bought 1.22 million shares of the company on Monday to show support for the embattled tabloid’s owner.

The changes in stock price of Next Digital Limited from July 14, 2020 to August 13, 2020. Photo: HKEX screenshot.

Police arrested the 71-year-old media mogul on suspicion of colluding with foreign forces, which is outlawed under a sweeping national security law imposed by Beijing in late June. His sons and some senior executives of Next Digital were also rounded up.

Following the arrests, police raided the media company’s offices in Tseung Kwan O, taking away at least 30 boxes of evidence, according to Apple Daily. The company announced on Tuesday it would seek an interim injunction to protect the confidentiality of journalistic materials said to have been among the documents seized by police.

Speaking to Bloomberg Television on Friday, the media tycoon said people had bought shares of Next Digital to voice their anger and show support for the company. He said he had warned people that they could lose money if they purchased the stock.

Supporters also bought tens of thousands of extra copies of Apple Daily during the week, prompting the paper to expand its print run.

Supporters holding Apple Daily newspaper outside police station where Jimmy Lai was held. Headline reads “Don’t fear tyranny.” Photo: KH/United Social Press.

“Everybody bought a little bit [of shares]. That became a lot of it and it jacked up the price. I was telling people ‘don’t do it, don’t do it’,” Lai told Bloomberg.

On Tuesday, Innes Tang, chairman of the pro-establishment group Politihk Social Strategic, filed a complaint to the Securities and Futures Commission urging the market watchdog to suspend trading in Next Digital.

He claimed “mischief” behind the unusual changes in Next Digital’s share price and accused the authorities of turning a blind eye to the abnormalities. He said small investors might suffer a great loss if the price took a nosedive later.

Photo: Kelly Ho/HKFP.

“When there are investors who suffered huge losses everywhere, should they complain against Next Digital, or the government’s incapability to monitor?” Tang wrote on Facebook on Wednesday.

The Securities and Futures Commission said on Tuesday it had been monitoring the trading and urged investors to exercise “extreme caution.” It also asked Next Digital promptly to disclose information likely to affect its stock price, including its financial position and operations, “to avoid a false market in its securities.”

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Kelly Ho

Kelly Ho has an interest in local politics, education and sports. She formerly worked at South China Morning Post Young Post, where she specialised in reporting on issues related to Hong Kong youth. She has a bachelor's degree in Journalism from the University of Hong Kong, with a second major in Politics and Public Administration.