Demon Stocks Back in the News

Demon stocks (妖股) are back. Shares that move wildly out of sync with the broader market for no apparent reason. Speculators often trade these shares because the runs can be spectacular, but there's always the risk they will blow up.

It's no surprise they're back considering two factors. One, animal spirits are back. Two, the Chinese government all but welcomed manipulative speculators back to the market in November.

China Welcomes Stock Manipulators in Bid to Boost Liquidity, Australia Fraudulent Lending

On the mainland exchanges, "hot money" is returning to the market because Chinese regulators said they would intervene less in the markets. The dearth of trading has caused the shift in focus. According to one report, traders suspected of manipulation are no longer receiving warnings for their suspicious trading activity.

The hot money has always been adhering to the short and fast style. When the news was first seen, Mr. W entered the trading. In fact, Mr. W has been away for more than two years. In mid-October this year, he was told by the broker that his account had been removed from the blacklist.

“There were three transactions this week. I still received the supervision letter for the first time, but I did not receive window guidance or supervision letter the next two times. The trading environment is indeed picking up.” Mr. W’s feelings also led to other active funds around him.

A number of active investors focused on short-term trading said that through a week of operations, they found that the verbal instructions and warning letters received were indeed decreasing.

The stock widely discussed yesterday, Eastern Communications, is now more than 20 percent off its intraday high.

JRJ: "妖股崩了":最高2天暴跌26%！8亿游资爆炒"被埋"

"10 times the stocks" Eastern Communications ( , diagnostic stocks ) fell. It plunged more than 6% this morning, and yesterday it staged a "sky floor", which dipped in the end, from a daily limit to a 9% drop. One and a half days (6 hours trading), Eastern Communications fell from yesterday's high, and its stock price plummeted 22.34%.

...Another demon leading Guofeng plastic industry, yesterday from the daily limit price of 8.81 yuan to the limit of the "sky floor", this morning fell again 8.58% closed at 6.61 yuan, down from the high level of 24.97%.

...Fengfan shares fell below this morning. Lutong’s share price and Huaying Technology’s share price also fell again or near the limit this morning. From yesterday’s high, the three stocks fell by 25.97%, 22.74% and 15.24% respectively.

21st Century: 十连板“妖股”频现A股江湖 投机资金杀跌成“最后的晚餐”？