The obscure companies have recorded eye-watering gains just days after their U.S. market debuts, with AMTD Digital climbing to as high as $2,555.30 last week from its debut price of $7.80 in July. At its peak, the company's market valuation dwarfed that of Facebook-owner Meta Platforms.
On Tuesday, AMTD Digital was down 45% at $221. Online brokerage Top Financial was trading 14% lower at $17.70, a day after its shares doubled in value to $20.75.
Magic Empire Global, which provides financial advisory and underwriting services, plunged 81.4% to $21.53. Its shares had risen as much as 6,000% from the $4 IPO price in just the second session of trading on Monday.
While the dramatic gains drew parallels to the frenzy in shares of GameStop and AMC Entertainment in 2021, trading volumes in the Hong Kong stocks have been at a fraction of the U.S. companies.
"I haven't seen a fundamental development you could point to and say this is why it (the rally) is happening," said Rick Meckler, partner, Cherry Lane Investments.
"Maybe the names are changing, but there's still a lot of interest among these investors seeking out a place to gamble. Eventually, it ends in tears for them."
AMTD Digital has said it was monitoring the share volatility. On Monday, the underwriters of its IPO exercised an option to buy 2.4 million additional shares at the IPO price, taking advantage of the rally.
"It seems strange and I'm surprised the stock exchanges or regulators are not getting more involved because it doesn't sound like an efficient market," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
The Hong Kong-based companies did not respond to requests for comment outside business hours.
(Reporting by Medha Singh, Anisha Sircar, Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru; Editing by Aditya Soni)
By Medha Singh and Anisha Sircar