Jimmy Lai’s Next Delists in HK, Ending Stock’s Turbulent Run

Olivia Tam and Kari Lindberg
·4 min read
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(Bloomberg) -- Jimmy Lai’s Next Digital Ltd. ceases trading for good on Hong Kong’s stock exchange on Thursday, marking the end of an often controversial share listing.

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The exchange canceled the listing after the company failed to resume trading in its shares by a December deadline, according to a bourse statement on Monday. Shares of Next Digital, the parent of defunct pro-democracy newspaper Apple Daily, had been halted since the newspaper was raided by police in June 2021.

From the outset, Lai’s outspoken position on the Communist Party made it hard for his firms to do business. In 1994, Beijing moved to close the Chinese outlets of his clothing chain Giordano after he called Li Peng, then China’s premier, a “turtle’s egg with zero IQ.” His media company, then called Next Media Group, tried and failed a dozen times to secure a listing in Hong Kong before conducting a reverse takeover in 1999 to gain a backdoor listing.

The challenge didn’t end there. Lai struggled to get approval from the stock exchange to sell his Apple Daily newspaper and Next magazine assets to the unprofitable Next Media, before succeeding in 2001 after Lai pledged at least HK$60 million ($7.7 million) of his own money.

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Over the following years, Next Media lost advertising revenue due to what it called an organized boycott of its publications, including by major property developers. In 2014, masked men besieged Apple Daily’s printing plant in the wake of citywide protests. Lai was a prominent supporter of the city’s pro-democracy movement, often attending protests in person, while his publications championed the cause.

When Lai was arrested in 2020 soon after the city’s national security law was passed, protesters — limited by the new legislation and social distancing rules due to the pandemic — piled into Next Digital’s shares to show their support. The stock surged more than 1,100% in just two days. That prompted a warning from the securities regulator and advice from Lai not to buy the shares because of the risk of losing money.

Apple Daily’s downfall would follow. Police raided its newsroom on June 2021, arresting top officials and freezing some assets on allegations of violating the security law. Next Digital had a market capitalization of HK$765 million ($98 million) when trading was halted that day. The paper soon stopped operating after it couldn’t access funds to pay suppliers or staff. A Hong Kong court ordered Next Digital to wind up later that year.

Authorities have accused Apple Daily of publishing articles that violated the city’s security law. Six former Apple Daily editors and journalists pled guilty in November to one count of collusion for seeking to impose sanctions on China or Hong Kong. They were initially arrested as part of the government’s security law case against Lai and will be sentenced pending the outcome of Lai’s trial.

Lai’s security trial has been delayed to September from its scheduled start date last month after Hong Kong sought help from Beijing to prevent his overseas-based defense lawyer from taking part. In December, Hong Kong court sentenced the 75-year old to almost six years in prison after he was convicted for fraud.

His detention has attracted considerable attention overseas. UK Prime Minister Rishi Sunak told parliament on Wednesday he is “engaged and robust” on the issue of Lai’s trial. His comments came a day after UK Foreign Office Minster Anne-Marie Trevelyan met with Lai’s lawyers, prompting condemnation from Hong Kong’s government.

Born in 1948 in a village in Guangdong province, Lai fled to Hong Kong in a sampan boat at the age of 12. In 1981, Lai founded Giordano, which he later sold to focus on his media empire. He started Next Magazine soon after the military used deadly force to break up protests in Tiananmen Square in 1989. Lai launched Apple Daily in 1995, two years before the handover.

The newspaper was known for scoops and investigative coverage, as well as racy reporting on entertainment, crime and celebrity gossip. It also unearthed the hidden wealth of high-ranking Chinese Communist Party leaders and exposed some unethical practices of officials in Hong Kong.

--With assistance from Philip Glamann.

(Updates to add comments from UK’s Sunak in third-last paragraph)

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