Things are not yet getting better for shareholders of Hong Kong retail forex broker KVB Kunlun Financial Group Ltd (HKG:8077).
In part caught by the tsunami of mass selling of stocks in China and Hong Kong this week, KVB shares traded down a further 16% on Wednesday to close at HK$0.76 – their lowest closing price since November 2014, when China’s CITIC Securities Company Limited (SHA:600030) first made its then anonymous bid to buy control of KVB from Li Zhi Da.
The main driver pushing down KVB shares, however, was the refusal of CITIC to raise its HK$0.65 per share offer to buy out minority shareholders of KVB. KVB shares had traded as high as HK$2.30 per share earlier this year as traders speculated that a better bid was coming from CITIC, but it never did. With their bluff called by CITIC, speculators have been dumping KVB shares.
At one point early in the session KVB shares actually dipped as low as HK$0.60 per share – below the HK$0.65 which CITIC paid Mr. Li for his shares, and which as we stated above it also offered to all other minority shareholders of KVB, although that offer formally expired on June 26.
The irony in all this, we believe, is that KVB’s base business is likely doing very well with all this market volatility continuing. Market volatility of all kinds usually equals growing volumes at forex brokers. We’ve already seen record volumes in June at leading forex broker EXNESS, and a nice increase in volumes at others such as Saxo Bank.
With KVB’s share price back down to earth, can we expect CITIC to renew its efforts to buy out minority shareholders and take over full control of KVB?
Stay tuned to LeapRate as we continue to cover this developing story.
KVB share price since CITIC offer in November 2014. Up, and back down. Source: Google Finance.