Recently, HuaZhong Automotive (stock code: 06830.HK) has experienced severe volatility in the Hong Kong stock market, with a single-day decline approaching 90%. This dramatic drop has garnered significant attention. As a prominent player in the automotive components sector, HuaZhong Automotive's precipitous stock price decline has not only had a substantial impact on investors but also serves as a cautionary signal for the entire automotive parts industry.

Reasons for the Decline

During the early trading session on the Hong Kong stock market, HuaZhong Automotive’s stock price plummeted nearly 90% before partially recovering. However, it remained down by over 80%, with the lowest price reaching HKD 0.22 per share. Concurrently, trading volume surged to over HKD 250 million. Prior to this sharp decline, the stock was neither a micro-cap stock nor a penny stock. At the previous day's close, its market capitalization was approximately HKD 3.5 billion, with a closing price above HKD 2 per share. Thus, the morning's lowest price of HKD 0.22 per share reflects an exceptionally severe sell-off.

(Source: uSMART HK)

Several factors may account for such drastic declines in Hong Kong stocks:

1. High Shareholding Concentration: Excessively concentrated shareholding can lead to delisting risks for some stocks.
2. Problems with Major Shareholders’ Pledged Shares: Issues related to the pledge of shares by major shareholders may result in forced liquidations.
3. Malicious Market Manipulation: Some stocks may be subject to deliberate market manipulation.
4. Overall Market Liquidity Issues: Potential liquidity problems across the market can exacerbate such price fluctuations.

From a news perspective, there have been no significant adverse developments reported for HuaZhong Automotive.

Company’s Urgent Response

In response to the unusual price movements, HuaZhong Automotive issued an urgent announcement on the Hong Kong Stock Exchange during the lunch break. The company’s board of directors acknowledged the abnormal price fluctuations and, after conducting a reasonable inquiry, confirmed that no undisclosed material information or insider information was available that could prevent false markets in the company's securities as of the announcement date. Furthermore, the board confirmed that the company's business operations remain normal and that there have been no significant adverse changes to the group’s operational or financial condition.

Company Profile

HuaZhong Automotive Holdings Limited provides comprehensive solutions, including the design and manufacturing of molds and tools for the production of specific products. Through its subsidiaries and joint ventures, the company supplies a range of automotive body parts, including exterior structural and decorative components (such as bumpers, front-end frames, dashboards, A/B/C/D pillars, grilles, and threshold trims), air conditioning unit housings, and storage tanks. The company’s five main product categories are automotive interior and exterior structural and decorative parts, molds and tools, air conditioning and heating unit housings and storage tanks, non-automotive products, and raw material sales. HuaZhong Automotive primarily operates within the Chinese domestic market.

HuaZhong Automotive is not the only stock to experience such dramatic intraday declines exceeding 90% in the recent Hong Kong market. For instance, on September 3, another Hong Kong stock, Shengneng Group, saw its price plummet by 98.40%, with intraday declines surpassing 99%. Additionally, Shimao Group's stock fell nearly 30%. Furthermore, other stocks such as CIFI, Baolong Real Estate, Yuanhang Group, and Agile Group also experienced declines exceeding 15%.

How to Invest and Trade via uSMART

To invest and trade stocks like HuaZhong Automotive on uSMART, log into the uSMART HK APP, select "Search" from the top right corner of the page, enter the stock code, such as "華眾車載" to access the details page for trading information and historical trends. Next, click "Trade" in the lower right corner, choose "Buy/Sell," and then enter your trading conditions to submit the order. Refer to the image guide below for further instructions:

(Source: uSMART HK)