Regulators in Asia Sound Alarm on Social Media-Driven Volatility

By Quentin Webb

Officials in two of Asia's biggest financial centers are watching U.S. markets warily, concerned that local investors could get hurt by piling into American meme stocks, or that the behavior could spread to their home turf.

On Wednesday, Hong Kong's Securities and Futures Commission warned investors about "the risks of trading highly volatile securities, including overseas-listed stocks as investment discussion forums in social media gain prominence and become increasingly influential."

"Investors should carefully manage market risks arising in any very volatile market," the regulator said, noting potential pitfalls (https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=21PR11) around trading suspensions and margin requirements.

A day earlier, Singaporean authorities had advised investors to "be on heightened alert" about the risks posed by trading driven by online forums and chat groups, and to beware the potential for pump-and-dump schemes.

Singapore's monetary authority and its stock exchange noted local interest "in recent activities in U.S. markets relating to stocks such as GameStop, AMC Entertainment Holdings, and BlackBerry," and said online discussions suggested similar speculation could happen in Singapore. The duo cautioned (https://www.mas.gov.sg/news/media-releases/2021/beware-of-risks-related-to-trading-incited-by-online-discussions) they were looking out for "false trading" and other misconduct.

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February 03, 2021 07:38 ET (12:38 GMT)

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