Hong Kong media tycoon and outspoken China critic Jimmy Lai was arrested yesterday for allegedly breaching the new national security law. Lai’s was part of a new round of arrests made under the controversial new law. Two of Lai’s sons, other senior management figures from his businesses and Agnes Chow, a pro-democracy student activist, were also arrested.
Lai himself has made no effort at hiding his objections to China’s authority in Hong Kong and has often courted foreign support for the pro-democracy cause. But in the wake of Lai’s arrest, shares in the parent company of his newspaper Apple Daily have skyrocketed, adding to the uncertainty over the future of the tycoon’s businesses.
The Rupert Murdoch of Asia
Lai has gained supporters and notoriety for being “the only Hong Kong multi-millionaire standing up to China,” in the words of CNN producer Jenni Marsh.
In 1995, Lai founded Apple Daily, a tabloid newspaper directed at Hong Kong’s working class and supportive of pro-democracy causes in the city, causes which have remained pertinent since the handover of the territory from British administration to China in 1997.
The outburst of protests, first over a proposed extradition bill in April of last year and more recently over the new security law, has seen the Apple Daily drawing ire from China’s authorities and state-owned media, particularly as a result of criticism from the newspaper and Lai.
In August 2019, China’s state media Global Times characterized Lai as part of a “Gang of Four” who have “disrupted Hong Kong … using freedom and democracy as a guise and young students as cannon fodder.”
Elsewhere, the state-run press agency of the PRC, Xinhua News Agency, has stated that Jimmy Lai’s media operations “has continuously fanned up social disorder and even violence.”
The agency also accused Lai of “inviting external forces to meddle in Hong Kong affairs,” an offense covered by the new security law that seems to be confirmed by Lai’s arrest yesterday on charges of “collusion with a foreign country, uttering seditious words and conspiracy to defraud.”
Lai has done little to challenge these assumptions of seeking foreign support. In a July 2019 visit to the United States, Lai met with Vice President Mike Pence and Secretary of State Mike Pompeo and stated “we in Hong Kong are fighting for the shared values of the US against China. We are fighting their war in the enemy camp.”
With his arrest on charges that carry a jail sentence of three to ten years, or even life imprisonment for “an offense of a grave nature,” the future of Lai’s businesses remain in doubt.
Yet, despite the news of his arrest and shocking footage of a mass police raid on Next Digital’s (Apple Daily’s parent company) headquarters, Lai’s business instead appears to be booming, with both shares and market value skyrocketing.
The “yellow stock circle”
The dual news breaks of Lai’s arrest and police raids on Next Digital’s headquarters would seemingly introduce a significant uncertainty factor into Next Digital’s and Apple Daily’s future operations, damaging their value and investor interest.
Yet the very opposite appears to have been the case.
Following Lai’s arrest and the raid on Next Digital’s offices, shares in Next Digital skyrocketed some 344 percent during the day, settling at the end of the day up 183 percent. Next Digital’s market value was also boosted by an estimated US$105.42 million in the process.
Analysts have been confused as to what precisely has caused this dramatic, unexpected rise in shares in light of the news of Lai’s arrest.
One source who spoke to TMS but wished to remain anonymous suggested that this boom in share value was not all good news.
“The CCP don’t make deals, they put people in jail and then seize assets. Shares skyrocketed because Next Media will soon belong to the CCP,” the source stated.
The source also pointed to the example of former Russian billionaire Mikhail Khodorkovsky, who was arrested and imprisoned for over a decade by Russian authorities in 2003 on fraud charges.
Some (including Khodorkovsky’s lawyers) have suggested that Khodorkovsky’s arrest was politically motivated given the billionaire’s support for various political groups and vocal opposition to the Putin regime and was intended to serve as a warning sign to Russia’s oligarch class should they also come out in opposition to Putin.
In the aftermath of his imprisonment, much of Khodorkovsky’s wealth and influence was extinguished. Khodorkovsky saw his previous net worth – some US$15 billion prior to his imprisonment – crumble and Khodorkovsky himself was forced into exile outside of Russia.
According to Clement So, professor at the Chinese University of Hong Kong, Jimmy Lai has cut a unique figure in the past, as “no other tycoon is willing” to be as outspoken against the Chinese central government as he is.
It is this willingness to criticize the authorities that may have landed Lai in trouble and painted him as a useful example for the authorities to use.
Lai’s arrest, coupled with the unexpected rise in the stock of his companies, could point to an imminent takeover by government authorities, with Lai serving as a warning shot from Beijing to Hong Kong’s rich and powerful.
However, this theory is not entirely satisfactory.
Following Lai’s arrest and the raids made on Next Digital, some Hong Kongers took to social media to call for the purchase of Next Digital shares as a means of showing support to the company and Lai himself. This is part of the so-called “yellow economic circle” which sees pro-democracy Hong Kongers supporting companies that themselves have expressed support for the movement.
One former columnist of Apple Daily, Stanley Wong, posted on social media that he had bought 1.2 million shares in Next Digital and stated that “the only way I can think of to support Next Media is to buy its stock.”
Prominent activist Joshua Wong agreed, stating that “even if Apple Daily publish a pile of blank paper tomorrow, we would go and buy a copy of it until it’s sold out.”
The support for Apple Daily also seems to have been fueled, in part, by statements made by Next Digital.
Following the broadcast of the police raid on its headquarters, the company declared “the staff of Apple Daily will stay fearless and continue speaking the truth amid persecution,” condemning the raid as “a severe attack on press freedom” that “should not be tolerated in a civilized society.”
The statement ended on a defiant note, writing that “Apple Daily shall fight on.”
Whether fueled by activist support or as part of a nefarious plan by Chinese authorities to profit from the acquisition of the now-arrested Lai’s companies, the unexpected explosion of Next Digital’s shares following the arrests and raids by Hong Kong police illustrate markedly the uncertain future of Lai’s business ventures.
The fact that Hong Kong police undertook a highly-public raid in the first place seems to indicate, in the view of the authorities, that Lai’s businesses are connected with his collusion and sedition charges.
Only time will tell if this is the end of Hong Kong’s most prominent pro-democracy mouthpiece.
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