Editorial | ‘Nerds’ battle sends warning to Hong Kong stock exchange
- It may be time for city regulators to extend current circuit breaker in wake of the GameStop shares fiasco on Wall Street
The world has been watching with fascination the so-called nerds vs Wall Street battle. It’s being seen as mostly an American phenomenon, but its effects are spilling over to other markets.
Silver prices have been pushed to their highest since 2013 after calls from the now infamous group “wallstreetbets” on Reddit to put the squeeze on big banks that have supposedly taken large bets on prices to fall.
In today’s highly connected capital markets, disturbance in one obscure corner can spread to the mainstream. Observers may well think the battle is just a spectator blood sport, but they may want to take precautions.
Several hedge funds have been badly hurt after “shorting” – betting prices will fall – against a small number of stocks with declining businesses, only to see their prices skyrocket.
Wallstreetbets has been blamed or praised – depending on your viewpoint – for the soaring prices of GameStop, a video game chain; AMC, an operator of cinemas in the United States hit badly by the Covid-19 pandemic; and BlackBerry, the once-dominant Canadian smartphone producer and other flat-screen phone makers.
