14th August 2019 – (Hong Kong)  612 Humanitarian Relief Fund was set up on 6th July to replace the temporary ‘Anti-extradition injured and arrested protesters Relief Fund’ set up on 16th June. (Read here).

The purpose of the fund is to provide legal expenditure, medical expenses, psychological counselling and other related assistance for protesters during anti-extradition protests. The structure of the fund was set up with radical front line protesters in mind as normal civilians would not want to engage in any confrontation with police or violence which would result in injuries or arrests.

The trustees of the fund include Joseph Zen, Cardinal of the Catholic Church from Hong Kong. He has been outspoken on issues regarding human rights, political freedom, and religious liberty, often attracting criticism from the Communist Party of China, singer Denise Ho, Cyd Ho Sau-lan and Dr Margaret Ng Ngoi-yee, both ex-Legislative Councillors.

On 4th August,  Jimmy Lai, owner of Next Media Group & his aide, Mark Simon (an ex-US navy with alleged ties to the US Central Intelligence Agency) met up with a mysterious foreign man and 7 others i.e.Martin Lee, Chairman of Democratic Party, Anson Maria Elizabeth Chan Fang On-sang who served as ex-Chief Secretary, Cardinal Joseph Zen who is also one of the main trustees of 612 Humanitarian Relief Fund, legislative councillors including Alan Leong, Jeremy Jansen Tam,  Lee Wing-tat and Albert Ho for dinner at 8 1/2 Otto E Mezzo Bombana, an Italian fine dining restaurant located at Alexandra House in Central.

Meanwhile, the  612 Humanitarian Relief Fund released its Fund report as of August 8 today which shows the total fund raised, fund granted and cases followed up since June 2019.

As at 8th August, it has raised a whopping HK$49,388.400.87. The breakdown of the contribution is as follows:

Total funds raised as at 8th August.

Apart from the most glaring contribution from APPLE DAILY (NEXT MEDIA GROUP) i.e. HK$300,000, the other donations remained dubious as the donors were not revealed. The HK$300,000 from Apple Daily is probably derived from the HK$1 donation from the 300,000 subscribers to their news portal. Those included anonymous cheques amounting to a total of HK$520,000, contributions under HK$100,000 each amounted to HK$36,175,403,68 and fund raised in 616 rally (HK$12,110,598.59). We have no qualms that some of these donations may be genuine but unfortunately the bigger numbers are somehow fishy. The Fund claimed that it would not comment or disclose details on any particular individuals or cases in order to protect the privacy of the entities involved.(Full report is available to the public at: https://bit.ly/33ua1LH)

The Fund has granted over HK$860,000 to 52 cases to provide various assistance. It has so far provided follow-up actions and support in various aspects for 411 attendances. However, it is not the HK$300,000 donation from Apple Daily that we are curious of, it is the fund raised during the 616 Rally (HK$12,110598.59) during its inception between 16th to 18th of June that we are concerned here. How did it raise this fund in such a short period of time?

On 2nd August, Hong Kong Monetary Authority (HKMA) was rumoured to be conducting investigations on the source of the donations to 612 Humanitarian Relief Fund to determine if any indictable offence has been committed. It is unknown if HKMA has concluded its investigations to-date.

Jimmy Lai who owns APPLE DAILY allegedly funded the Occupy Central movement in 2014. Together with his long term aide, Mark Simon, an ex-US navy, he  met up with US Vice President, Mike Pence and Michael R. Pompeo, US Secretary of State in July 2019 to discuss the situation in Hong Kong.

A Chinese state media accused yesterday that Jimmy Lai and his accomplices, Martin Lee, founder of the Democratic Party and Anson Chan, ex-Chief Secretary flew to United States to meet with local politicians with the malicious intent of discrediting the rule of law in Hong Kong and the principle of ‘one country, two systems’. 

The 16th June RALLY and NEXT MEDIA’s share price

On 15th June, Chief Executive Carrie Lam announced a pause in the passage of the extradition bill after the Legislative Council meetings had been postponed for four working days in a row. The pro-democracy camp feared it was merely a tactical retreat and demanded a full withdrawal of the bill and said they would go ahead with the 16 June rally as planned.

The main organiser of the street rally, Civil Human Rights Front claimed that almost 2 million turned out during the 16/6 rally which set the record of the largest protest in Hong Kong history.

Interestingly, the stock price of Next Digital Ltd (282:HK) (Previously known as Next Media) also started to spike from 6th June this year, trading volume increased from over 2,940,000 on 5th June to 117,987,304 on 17th June. The stock price slowly receded to HK$0.21 with a trading volume of 5,870,000 on 5th August before it started to move up again to HK$0.30 today with an active trading volume of 29,552,948. (Source : Bloomberg). We are not sure if Jimmy Lai is raising the 2nd round of funding for the protesters with regards to the recent surge. Co-incidentally, it was during June that anti-extradition protests were just about to intensify.

On 16th June,  612 Humanitarian Relief Fund was set up under the temporary entity of ‘Anti-extradition injured and arrested protesters Relief Fund’. An amount of HK$12,110,598.59 was also raised for the Fund and labelled merely as ‘616 rally’. The donor’s entity has been kept confidential by the Fund.

According to Next Digital Ltd’s annual report in 2018/19, Jimmy Lai owns 71.26% of the company shares. This means that the company is highly illiquid as the public float is less than 30%. Hence, the stock only had an average daily trading volume of less than 1 million throughout 2019 with an average price of HK$0.19 to HK$0.21.

The spike in price during this sensitive period is mind boggling even if the company introduced a paywall subscription to its readers as most people were sceptical that the revenue generated would be barely sufficient to cover its mounting debts.

Judging from the trading patterns, it seems likely that the share price reached a high of HK$0.38 before some large blocks of shares were offloaded to an undisclosed buyer either in open market or off market. As we could not find any records of off market transactions, we could perhaps deduce that they were done in open market as no one would buy the stock at this price unless the buyers were friendly. Moreover, open market transactions usually leave no trace behind. If we assume 200,000,000 shares have changed hands and sold at an average price of HK$0.30 to HK$0.32 cents, the seller would have raised at least HK$60 million in cash. To buy back the shares in near future, the seller will then wait till the share price has receded to the average low and he can then make the purchase again.

Meanwhile, Next Digital Ltd issued a standard announcement after The Stock Exchange of Hong Kong queried its UNUSUAL PRICE AND TRADING VOLUME MOVEMENTS. This query is normally issued if the Stock Exchange suspects possible stock manipulation. Next Digital Ltd then replied by saying that it was not aware of any reasons for these price and volume movements or of any information which must be announced to avoid a false market in the Company’s securities or of any inside information that needs to be disclosed under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Stock price for Next Digital Ltd (282: HK) from Sept 2018 to Aug 2019. Source : Bloomberg
Between July and Oct 2018, Jimmy Lai was actively trading his own stocks (As shown by the green tags). Source : Bloomberg

On 9th August, a mainland Chinese state media wrote an article to accuse that National Endowment for Democracy (NED) , a private, nonprofit foundation in United States dedicated to the growth and strengthening of democratic institutions around the world is behind the current civil unrest in Hong Kong. The article alleged that Jimmy Lai of Next Digital and Martin Lee, chairman of the United Democrats of Hong Kong  are closely knit to the foundation. If the allegation were true, NED could have used a few proxy accounts to hide behind securities firm such as China Galaxy and Citic Securities to buy Next Digital Ltd shares in mid June at its peak without any trace.

NEXT MEDIA GROUP’s financial status

The group recorded a net loss of HK$338 million in the financial year of 2018-2019. The total accumulated loss in 4 years has reached over HK$1.5 billion while the group has suffered a whopping loss of HK$2.3 billion in the last 9 years. 

Next Digital’s gearing ratio was more than doubled to 18.7 per cent in 2017 from 9.1 per cent 3 years ago. It has outstanding bank loans of HK$485 million in 2018 that must be repaid over the next four years. In 2018, the company disposed of a property in Taiwan worth HK$435 million to ease its financial burden. It recently also launched a paywall to charge readers for its online content.

Despite the poor financial health of the company and illiquid nature of the company shares, it is startling as to how the share price could spike during this sensitive period in the absence of any new revenue booster and also how NEXT MEDIA could have contributed HK$300,000 to the 612 Humanitarian Relief Fund, not to mention the dubious large sum of HK$12,110,598.59 donated via 616 Rally and contributions under HK$100,000 each which amounted to HK$36,175,403,68.

612 Humanitarian Relief Fund and the United States connection

By buying NEXT DIGITAL shares at a higher price, United States could conveniently fund the anti-extradition protests using NED via Jimmy Lai who would in turn inject the money into 612 Humanitarian Relief Fund . Alternative, United States can also fund the protesters via crowdfunding sites like gofundme.com as reported by us earlier. The costliest bill when funding a civil unrest is no other than legal and medical expenses. Since the people of Hong Kong are already infuriated with the government over the amended extradition bill and police brutality, it would be cheaper and easier just to incite and fund a small group of front line young student protesters who have no stake in the economy which cost in the region of HK$50-$100 million as evident in the financial report of the 612 Humanitarian Relief Fund.