A THIRD Hong Kong stock in less than a week lost most of its value in a sudden one-day plunge, underscoring concern that the US$5.2 trillion market has become a breeding ground for wild volatility.

China First Capital Group, an investment company that focuses on financial and education services, plunged as much as 78 percent yesterday before trading was suspended.

Virscend Education Co., which is partly owned by First Capital, also lost as much as 78 percent before paring its decline to 30 percent.

Virscend suspects its shares were sold by First Capital because of a margin call, but has not verified anything, said Chen Keyu, Virscend’s director of investor relations.

While Hong Kong is no stranger to sudden stock slumps, the fresh wave of declines is once again putting the spotlight on corporate governance at the city’s listed companies.

Last week, ArtGo Holdings Ltd. slumped 98 percent after MSCI Inc. scrapped plans to add the stock to its benchmark indexes, citing concerns about investability. That same day, a furniture maker fell as much as 91 percent after a short-seller questioned the company’s accounting.

First Capital owned a 1.6 percent stake in ArtGo as of July, according to an exchange filing.

Hong Kong’s Securities and Futures Commission and stock exchange operator have made cleaning up the city’s equity market a priority in recent years, saying extreme share price swings and allegations of manipulation — particularly among small cap stocks — have damaged Hong Kong’s reputation.

The collapse in 2017 of a shadowy group of companies, dubbed the “Enigma Network” by local activist investor David Webb, is now part of the biggest investigation of market malfeasance in the city’s history. (SD-Agencies)