Hong Kong stock grabs big dollars (and invites big questions) with its 8,500 per cent return

China Ding Yi Feng is the world’s top-performing big-cap stock, boasting investors as BlackRock, Vanguard index funds

Ding Yi Feng Holdings is classified in Hong Kong as a Chapter 21 investor, akin to a closed-end fund that takes minority stakes in other companies and whose success (or failure) on the stock picks of their investment teams

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View of the lightning strike photographed from Tsim Sha Tsui on 22 August 2018. The International Commerce Centre (ICC) is the tall building on the left. Photo: SCMP/K. Y. Cheng

Published: 3:43pm, 22 Feb 2019Updated: 9:00pm, 22 Feb 2019

Perched below the Ritz-Carlton in Hong Kong, inside the city’s tallest skyscraper, is one of the biggest mysteries of the investing world.

There, on the 66th floor of the International Commerce Centre, lies the headquarters of an obscure company that, at first glance, looks like a wild success. Its stock has bested everything in its class with a staggering five-year run: 8,563 per cent.

But ask local market veterans about China Ding Yi Feng Holdings, and they’ll tell you the rally makes little sense. The investment-holding company has lost money for seven of the past eight years; its stock trades at one of highest valuations worldwide; and DYF’s chairman, a Taoist scholar who boasts investing skills on par with those of Warren Buffett and George Soros, has recently been the subject of several critical reports in Chinese media.

“Fundamentals do not support the stock’s rally at all,’’ said Li Yuanrong, managing director of Shenzhen-based venture capital firm 20VC.

DYF’s curious surge adds to a long list of extreme, unexplained stock swings that have threatened to dent Hong Kong’s reputation as one of the world’s premier financial markets. It also shows how, thanks to the growing popularity of passive investment strategies, such episodes increasingly involve global money.