In just 26 trading sessions, XXF (02473) experienced a dramatic plunge, losing over 94% of its market value from its historical peak. Recently, amidst a persistent downtrend, its stock price suddenly produced two sharply rising sessions. On March 3rd and 4th, XXF's share price surged consecutively, with daily gains of 20.59% and 25.20% respectively. Some market observers suggested the sharp rallies following the steep price decline indicated funds were snapping up shares due to suddenly attractive valuations. However, beneath the surface, strong undercurrents were swirling – alarm bells were ringing due to abnormal trading volume and turnover rates.
On March 3rd, XXF's trading volume exploded to HKD 1.669 billion, a more than five-fold increase from the previous day. The turnover rate soared to 88.74%, indicating market sentiment was nearing a boiling point. On March 4th, the frenzy intensified further: trading volume expanded to HKD 2.272 billion, while the turnover rate reached a staggering 99.94%. This meant that nearly every freely tradable share changed hands that day. This was not a typical technical rebound, nor a healthy signal of accumulation, but an extremely high-risk trading signal – a massive, potentially brutal migration of shareholdings.
When overlaying the peculiar movements of Southbound Capital, the precise transfer patterns of major shareholders, and the manic price action, a clear picture emerges: this was not the market's spontaneous choice, but a meticulously calculated capital operation, with every step – from the crash and positioning to matched trades and distribution – carefully orchestrated. At the height of the frenzy, driven by sentiment and herd behavior, the shareholdings appear to have been successfully transferred.
The Plunge – Creating Extreme Lows and Panic Since its IPO on the Hong Kong stock exchange on November 9, 2023, at HKD 1.10 per share, XXF reached its historical peak price of HKD 15.96 (adjusted for splits) on January 22, 2016, representing a cumulative maximum gain of over 1,350.9%. However, compared to the soaring stock price, its actual profitability since listing had been shrinking. In 2023, its net profit was CNY 110 million, which fell sharply by 63.75% to CNY 39.97 million in 2024. Although net profit grew in the first half of 2025, it remained at only CNY 22.486 million. At its peak, its P/E ratio exceeded 100 times, and its P/B ratio was significantly higher than the industry average.
In the six months preceding the sharp decline (July 2025 to January 2026), XXF's stock price surged from HKD 5 to HKD 15.96, a gain of over 200%. This rally was primarily driven by a series of "positive" announcements from the company, such as collaborations with Cainiao, Hello Chuxing, and New Stone, and a proposed acquisition of millimeter-wave radar company Kuangshi Technology. However, many of these collaborations remained at the "strategic intent" or "memorandum of understanding" stage, failing to translate into actual profits. Some market views suggest that XXF initially inflated its share price largely through low-volume matched trades, and with its fragile fundamentals, risk accumulated gradually.
When the price reached its historical high, nominee accounts conducted massive concentrated selling through seats like CMB International, leading to a break in the funding chain. This triggered panic selling and a stampede, causing the stock price to plummet 73.25% on high volume on February 2nd of this year. This crash can be seen as the inevitable bursting of a valuation bubble inflated by speculative capital, which collapsed upon encountering weak fundamentals and a shift in market sentiment. It starkly reveals the significant risks inherent in concept speculation detached from fundamentals.
Following the crash, XXF issued an announcement on the evening of February 2nd stating it was "not aware of any reasons for the unusual price and volume movements" and confirming normal business operations, with major shareholders and directors not selling shares during the volatility. However, judging from subsequent capital flow patterns, this crash was not the finale, but a crucial transit point for a more sophisticated operation. The plunge, by rapidly wiping out all technical support and market confidence, created panic selling, thereby generating highly attractive absolute low prices, paving the way for subsequent capital entry.
Positioning – Southbound Capital "Bottom-Fishing" and Shareholder Transfers After the single-day crash of 73.25% on February 2nd and a cumulative plunge of 83.15% over just eight trading days, XXF's stock price did not find a bottom. Instead, from February 3rd, it entered a prolonged channel of gradual decline. The price slid from HKD 3.05 down to a low of HKD 0.95 on March 3rd, falling another 68.86% during this period. Thus, in just 26 trading days, the stock had plummeted 94% from its historical high, a complete wipeout.
However, a counterintuitive phenomenon persisted throughout this period of decline: the number of XXF shares held by Southbound Capital (through Stock Connect) surged dramatically from approximately 38.8775 million shares on February 3rd to about 733 million shares by March 2nd. The holding ratio skyrocketed from 2.51% to 47.36%. This meant that during the month of continuous price decline, Southbound Capital "increased its holdings" to nearly half of the company's shares. Predictably, such large-scale, sustained buying by Southbound Capital, often dubbed "smart money," would inevitably attract numerous retail investors to follow suit.
But a core contradiction emerged: if such massive "smart money" was frantically buying, theoretically providing strong buying support, why did the stock price still fall nearly 70% over the same period? This clearly defies basic market logic. The key to the answer likely lies in the frequent share deposit and withdrawal activities occurring during the same period.
Data shows密集 share deposit/withdrawal activities for XXF since 2026. Notably, on February 10th, 21.98% of the shares were deposited into "Futu Securities International (Hong Kong)." Futu boasts a massive retail client base with excellent liquidity. This move was equivalent to delivering the primary "ammunition for distribution" directly to the frontline battery facing retail investors. Furthermore, on February 20th and February 23rd, 6.73% of shares were transferred from "CMB International Securities" to "Shanghai-Hong Kong Stock Connect (Southbound)" and 6.16% of shares were transferred from "Futu Securities International (Hong Kong)" to "Shanghai-Hong Kong Stock Connect (Southbound)." The purpose of transferring shares into Stock Connect was to introduce a "new water source." As Stock Connect links to the vast mainland capital pool, once shares are transferred in, the system records them as "Southbound Capital holdings," but this does not represent actual cash purchases.
These transfers into Stock Connect became the primary reason for the continuous rise in the Southbound Capital holding ratio. The underlying logic is that the change in holding ratio created the illusion for the market that "smart money is frantically bottom-fishing" and that huge amounts of capital were optimistic and locking in shares, even if this wasn't the reality. This did not prevent it from encouraging other Southbound Capital buying. These shares also became tools for subsequent matched trading within the Stock Connect channel, creating buying pressure and trading volume.
Thus, the seemingly contradictory picture is explained: the "surge" in the Southbound Capital holding ratio was primarily due to the accounting effect of share transfers, not sustained net buying power. While the narrative of "smart money" heavily "bottom-fishing" attracted market followers and provided initial liquidity, the real selling pressure – the massive holdings already deployed at retail broker seats like Futu, and potential divestments through other channels – was being released in an orderly, continuous, and隐蔽 manner. The absolute force of this selling completely overwhelmed and overshadowed the buying from Southbound Capital and other followers, resulting in the unique phenomenon of the stock price grinding lower amidst reports of "increased holdings."
Additionally, on February 26th, 5.72% of shares were deposited into "GF Securities (Hong Kong)." Depositing a significant number of shares into a comprehensive brokerage shortly before the rebound likely aimed to prepare备用筹码 and channels for more complex subsequent operations, such as margin financing, derivatives trading, or coordination with other institutions.
Matched Trading – Engineering the Rebound and Activating Liquidity Against the backdrop of extreme oversold conditions and the "bottom-fishing" narrative, XXF's stock price, after dipping around -6% in the morning session on March 3rd, shot up in a straight line to a gain of 35.29%, with a maximum intraday swing exceeding 40%. After surging, the price then retreated nearly 30 percentage points, followed by another sharp rally in the afternoon, closing up 20.59% for the day. A sharp vertical rise followed by sustained slight retreats is a classic distribution pattern. This drove trading volume from HKD 301 million the previous day to HKD 1.669 billion, and the turnover rate increased from 18.2% to 88.74%. Such a high turnover rate is highly unusual for a low-priced, small-cap stock, which typically suffers from poor liquidity. This strongly suggests the presence of substantial matched trading on March 3rd. Matched trading primarily serves three purposes here: 1) Using relatively little capital to rapidly inflate the price, creating a strong wealth effect; 2) Creating the false impression of excellent liquidity and enthusiastic capital participation, attracting the attention of speculators across the market; 3) Testing and activating all potential buying interest in the market through huge trading volume.
Distribution – Massive Turnover Completes the Share Transfer By March 4th, XXF's stock price began rising steadily from the open, surging up to 30% within the first hour. Trading volume further expanded to HKD 2.272 billion, while the turnover rate reached an astonishing 99.94%. Such an exceptionally high turnover rate is a hallmark signal, indicating that almost all freely tradable shares in the market were bought and sold within a single day. During this process, the shares previously deposited into the broker system, along with some of the shares used for matched trading during the rally, were successfully and extensively sold off to market followers and retail investors attracted by the sharp price increase.
Notably, the Southbound Capital holding ratio did not decrease significantly during the large gains on March 3rd and 4th, with net selling being only -3.98 million and -4.045 million shares respectively. This suggests only a small portion of these funds chose to realize profits, indicating Southbound Capital may have played a role in "locking up shares" or "supporting the price." However, the cost basis for these holdings was extremely low, providing a thick safety cushion.
By this point, the remaining shares following the initial crash had successfully made a "great escape" amidst high liquidity. The short-term task of inflating the price was complete. All investors who bought in during the rally became the new "shareholders," and the stock lost its core momentum for further gains. The subsequent trend is highly likely to involve a prolonged period of gradual decline or a retest of lows. On March 5th, XXF closed down 11.69%.
Thus, beginning with the crash on February 2nd, XXF staged a drama that could be considered a textbook case of capital operations in the Hong Kong market. It started with an extreme plunge to create a "golden pit," then utilized the "smart money" aura of Southbound Capital to attract followers and stabilize sentiment. Simultaneously, shareholders quietly transferred their holdings to brokerage seats conducive to trading. Subsequently, matched trading was used to engineer a violent rebound and massive volume, capturing full market attention. Finally, at the moment of peak liquidity and狂热 sentiment, the complete distribution of shares was achieved. The entire process precisely exploited market sentiment, regulatory gaps, and capital advantages. For the average investor, the meaning of that 99.94% turnover rate is abundantly clear.