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Shuli Ren

Hong Kong’s Flash-Crash Enigma Remains Unsolved

Two years after the regulator pledged to get tougher, penny stocks are still collapsing for no apparent reason.

Even Muddy Waters stays away from some dark corners.

Even Muddy Waters stays away from some dark corners.

Photographer: Eva Marie Uzcategui/Getty Images

Two years after Hong Kong’s securities regulator vowed to nip irregularities in the bud, flash crashes are still plaguing the world’s fourth-largest stock market.

This year’s wave rivals the notorious “Enigma Network” that prompted the last bout of regulatory hand-wringing in 2017. In mid-January, Chinese real estate developer Jiayuan International Group Ltd. plunged without warning, triggering a $4.8 billion selloff in small-cap stocks. Then on Monday, circuit-board maker Camsing International Holding Ltd. tumbled a record 80% after the company said Chairwoman Lo Ching was in police custody in Shanghai. On the same day, a number of other small stocks, including Beijing Sports and Entertainment Industry Group Ltd., crashed for no apparent reason.