A bit of a confusing one to start Week 34 on the ASX: Microcap Kaili Resources (ASX:KLR) has become the talk of the Oz bourse after popping as much as +8,650% on Monday, going from 4.1cps to $1.08 in one arvo.
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The mindboggling leap did, of course, result in a speeding ticket for the Yitai Coal-backed rare earths miner, and Kaili remains halted Tuesday morning.
It’s the ASX’s very own “meme stock” moment, as pointed out by plenty of publications, as the price kept churning higher, and one that’s a little inexplicable, too.
Kaili did try, though – the microcap’s response to the ASX’s “please explain” was to suggest Australian traders had just really liked its Friday announcement, where it shared that it had been handed South Australia drilling approval.
It’s not quite the slam dunk explanation many would’ve hoped when reading the news.
More likely is some kind of pump and dump, with $2M changing hands.
That’s not to say that’s what happened, but when looking at the unexplainable +8,650% gains and price leap to $3.18 – which did trickle back down eventually – you can only scratch your head and guess what reasons.
Some stunned market investors told the AFR they thought it was “more akin to what you see in crypto rather than equities, even in penny stock land.”
Other finance journos simply admitted it’s “hard to say” exactly what happened.
(And HotCopper forums users have been calling a planned pump since lunch yesterday.)
Perhaps a more important question is: What happens next? Last time we saw a rise like this was when Mindax (ASX:MDX) returned to ASX trading and powered +1,000% on day one. It has since been at 5.7cps for a while on tiny trades.
And during COVID-19, some stocks simply rocketed on hype, like Jupiter Energy (ASX:JPR) and its news-less leap, but they too came back down to earth eventually.
It’s likely Kaili is facing a big fall when it rumbles back to life, but this HotCopper journo wouldn’t have tipped a +8,650% sizzle on Monday either.
(If nothing else, you could add it to your HotCopper Watchlist to wait and see.)
As noted – KLR remains halted right now after last selling at $1.08.
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