MOG Digitech (HKG: 1942) shares are up 10% today. There are two useful things we can say about this MOG share price rise - none of them actual descriptions of why the shares have risen but each and both providing some part of a clue. One is simply that old stock market saw of the dead cat bounce. Drop something from high enough, even a dead cat, and it will bounce. That could be a useful description of MOG’s recent share price performance. The other is the base problem that we out here have in trying to trade Mainland shares. We simply do not get the information flow to be able to do this with any great knowledge of what is happening.
As to the business at MOG Digitech: “MOG Digitech Holdings Ltd, formerly MOG Holdings Ltd, is a China-based holding company mainly engaged in financial technology. The Company operates five segments: Digital Retail Payment Solutions Hardware Trading Business segment, Sales of Optical Products segment, Franchise and License Management segment, E-commerce segment and Financing Services segment. The Company's businesses include digital Renminbi solution provider for insurance industry, scene-based ecological digitalization for consumers, business-to-business digital Renminbi hardware trading and digital Renminbi payment solution.” Which is all very excellent of course. Except it doesn’t seem to be working all that well.
MOG Digitech share price from Google Finance
One problem is that they were to have a convertible bond issue and then they weren’t: “MOG Digitech Holdings' shares fell sharply early Friday after the company terminated plans to issue convertible bonds. Shares plunged 77% to 18.30 Hong Kong dollars, their biggest percentage decline since the company's listing in April 2020. Despite the sharp fall, the stock's price still is almost double year to date.” More detail: “The financial technology company said on Sept. 15 that it entered into a subscription agreement with SEB Holdings for a private placement to issue convertible bonds worth 50 million Hong Kong dollars (US$6.4 million). The bonds would have been convertible to 769,231 shares at HK$65 a share. Then on Thursday, it said its plans to issue convertible bonds were terminated, as some conditions couldn't be fully satisfied.” Well, if a company needs capital and then doesn’t get it then that’s not a good sign.
And thus we can muse about dead cat bounces and so on. There was a rally at relisting but that too faded.
The big issue here though is that there’s little to no public information about MOG in English for us. There might be on the Bloomberg terminal, there might be in the Chinese language, but openly in English? Very little for us to go on. Which is one of those base problems in trying to trade China Mainland related shares. We simply don’t gain the information flow to know what’s happened, let alone what might. Trading is therefore more of a gamble than usual.