(Bloomberg) -- His last big warning to investors, about a shadowy group of companies he dubbed the Enigma Network, preceded a $6.1 billion collapse in the stocks and Hong Kong’s biggest-ever financial raid.
Now David Webb, the activist investor and resident gadfly of Hong Kong’s capital markets, is at it again. His new, if less provocatively named, target: the Huarong-CMB Network.
In a post on his website Friday, Webb published a list of 26 stocks “not to own” due to links with China Huarong Asset Management Co., the bad-debt management firm whose former chairman is under investigation by Chinese authorities.
The list centers around China Huarong and China Minsheng Banking Corp., two companies that helped finance a “complex web of dealings” in 24 other publicly traded firms, Webb wrote. Huarong’s former chairman Lai Xiaomin was expelled from China’s Communist Party for violations including bribery and squandering state assets.
China Huarong and China Minsheng Banking didn’t immediately reply to requests for comment.
Webb’s earlier sleuthing led to him write in May 2017 about links between some 50 companies that he dubbed the Enigma Network. Shares in many of the firms named in that report fell in the ensuing days, and tumbled further in the following month, some by more than 90 percent. Several stocks remain suspended amid an investigation by Hong Kong authorities.
Most of the 26 companies named in the latest report are listed in Hong Kong, where the market for smaller companies has long been marked by extreme volatility. Tightly controlled and easily manipulated shares remain a concern for the Securities and Futures Commission and Hong Kong Exchanges & Clearing Ltd., which have made a series of rule changes to curb bad behavior.
--With assistance from Jun Luo.
To contact the reporter on this story: Benjamin Robertson in Hong Kong at brobertson29@bloomberg.net
To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Michael Patterson
©2018 Bloomberg L.P.
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