World's top-performing stock halted after mysterious 8,500% gain

General view of the skyline of Hong Kong. China Ding Yi Feng Holdings Ltd was halted by Hong Kong's Securities and Futures Commission on Friday (March 8).
General view of the skyline of Hong Kong. China Ding Yi Feng Holdings Ltd was halted by Hong Kong's Securities and Futures Commission on Friday (March 8).PHOTO: AFP

HONG KONG (BLOOMBERG) - A Hong Kong stock whose mysterious world-beating surge vaulted it from obscurity into multibillion-dollar investment funds was suspended by city's securities regulator.

China Ding Yi Feng Holdings Ltd (DYF), the Hong Kong investment firm whose more than 8,500 per cent surge over the past five years bested every other stock in the MSCI All-Country World Index, was halted by Hong Kong's Securities and Futures Commission on Friday (March 8). A DYF spokeswoman said she couldn't immediately comment.

While the SFC's reasons for halting DYF weren't immediately clear, scrutiny of the company has intensified in recent months. Hong Kong market veterans last month questioned the sustainability of the surge that turned DYF into one of the world's most expensive publicly traded companies. The comments followed several critical reports by Chinese media on DYF chairman Sui Guangyi, a Taoist scholar who has overseen lacklustre results at DYF while touting investing skills on par with those of Warren Buffett and George Soros.

DYF's surge added to a long list of extreme, unexplained stock swings in Hong Kong that have threatened to dent the city's reputation as one of the world's premier financial hubs. Its suspension puts a spotlight on MSCI Inc's decision to add DYF to its global benchmark indexes in November, a move that prompted emerging market index-tracker funds run by BlackRock Inc, Vanguard Group Inc and Northern Trust Corp to become some of DYF's biggest shareholders.

Critics of MSCI's decision, including former Hong Kong Exchanges & Clearing Ltd director David Webb, have said the index compiler should do more to vet companies before adding them to equity gauges that serve as benchmarks for investors overseeing trillions of dollars. MSCI, which uses quantitative criteria such as market value and trading volume to construct its global indexes, has said the gauges are designed to represent the "investment opportunity set" without making any "subjective assessments" of constituent companies.

Bloomberg LP, the parent company of Bloomberg News, competes with MSCI and others by compiling indexes and providing analytics for stocks, bonds and commodities.

Smartac Group China Holdings Ltd, a Hong Kong-listed stock that DYF reported holding at the end of last year, tumbled 33 per cent as of 10.01am local time on Friday.