A view of the Hong Kong Stock Exchange's building in February Photo: VCG

Shares in Jimmy Lai Chee-ying's media firm Next Digital plunged 40.91 percent Wednesday to close at HK$0.65 ($0.084) after two days of large gains. The local capital market regulator Tuesday advised investors to exercise "extreme caution."

The shares surged 331.37 percent to close at HK$1.10 Tuesday, a rise of about 1,100 percent from Friday.

A Hong Kong-based finance observer, who preferred to be anonymous, told the Global Times on Wednesday that the unusual surge in the share price might be because secessionists in Hong Kong such as Joshua Wong Chi-fung called for support for Next Digital.

"Given that the previous average daily transaction volume for this stock was less than several million, the price will naturally surge if hundreds of thousands of pro-secession Hong Kong rioters rush to buy the stock," the observer said. 

He said that Next Digital's share price will eventually return to a very low level as the company reports losses of hundreds of millions of Hong Kong dollars annually.

The observer stressed that much capital had come from securities firms from the island of Taiwan, saying that money had possibly been transferred from the island to inject into Next Digital shares.

Francis T. Lui, professor emeritus of the Hong Kong University of Science and Technology, told the Global Times that the company doesn't offer much value as an investment, and those who keep holding the shares at a relatively high price are probably the sources of funding.

PolitiHK Social Strategic Chairman Innes Tang filed a complaint with the Hong Kong Securities and Futures Commission (SFC) Tuesday to urge the immediate suspension of Next Digital trading, saying that the unusual movements in its share price would eventually harm investors' interests and the stock exchange's reputation.

After receiving a large volume of enquiries, the SFC made a statement on Tuesday night saying it strongly advised investors to exercise extreme caution regarding Next Digital shares. It also urged the company to disclose relevant information.

While individual investors who were hoodwinked into buying the stock may face heavy losses, Sing Tao Daily reported Wednesday that Lai is in a rush to dispose of his Hong Kong properties.

Lai recently contracted agencies to sell a whole floor of the Tai Ping Industrial Centre in Hong Kong, lowering the price from HK$166 million to HK$133 million, about 5 percent below the market price, the report said. Lai was released on bail on Wednesday morning.

"Lai and his Next Digital acted as the commander in chief of anti-China moves for years and therefore there must be a large volume of foreign funding, technologies and propaganda materials to prompt Hong Kong people to promote secessionist activity," the observer said, noting that Lai is a malignant tumor for Hong Kong.