SenseTime crashes 8%! Guotai Junan confirms someone was taken away—which company is actually involved in insider trading?

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Source: Jinshi Talk

On March 12, according to Bloomberg, on March 10, citing informed sources, Hong Kong authorities raided Citic Securities’ Hong Kong subsidiary and Guotai Junan International Hong Kong office. It is reported that authorities searched departments responsible for equity capital markets (ECM) at both firms and took away at least one senior executive for investigation.

Since ECM mainly handles equity financing, such as IPOs, rights issues, placements, convertible bonds, and other equity-related activities, Jinshi Talk analyzed that the recent raids on these two Chinese brokerages might be related to the chaos in Hong Kong’s new stock issuance market. However, further verification revealed that the incident does not involve new stock issuance but insider trading triggered by rights issues.

On the morning of March 12, Guotai Junan International issued a statement confirming the incident. The Hong Kong Securities and Futures Commission (SFC) and the Independent Commission Against Corruption (ICAC) visited the company’s main Hong Kong offices to execute search warrants, and some documents were seized. An employee not on the board of directors was detained by ICAC.

By noon, ICAC and the SFC announced that on March 10 and 11, they conducted joint operations codenamed “Fuse,” mainly targeting insider trading and corruption. They searched 14 locations, arrested six men and two women aged between 35 and 60. Those detained include senior management from two licensed securities firms and one licensed hedge fund management company, as well as a middleman. (Jinshi PS: This again confirms that, besides Guotai Junan International, there are also Citic Securities Hong Kong subsidiary or CITIC Lyon involved.)

According to the announcement, senior executives of licensed securities firms are suspected of accepting bribes exceeding 4 million yuan from licensed hedge funds to obtain insider information on Hong Kong-listed companies before share placements. The hedge funds then shorted related stocks or entered into short positions in the capital markets. Following the announcement of the rights issues, the stock prices fell, and the hedge funds profited approximately $315 million (about HKD 2.5 billion) through short selling.

Additionally, Hong Kong insiders told Jinshi Talk that the hedge fund involved is Infini Capital Management Ltd., and Chen Qianwen was also involved in this crackdown.

Infini Capital is an alternative investment firm focused on the Pan-Asia market. Tony Chin (Chin Tao) is the founder, previously worked at Morgan Stanley and HSBC, started trading in mainland China in 2011, expanded into offshore markets in 2015, and attracted external funding in 2023. Tony is also a major shareholder and board member of several TMT startups that later became industry leaders.

Most importantly, everyone is curious about which companies Citic Securities or Guotai Junan participated in for the rights issues, and whether hedge fund Infini Capital shorted those stocks in advance for illegal profits.

Jinshi Talk analyzed Wind data and found that over the past year, companies involved in share placements under both Citic Securities and Guotai Junan include SenseTime, Youjia Innovation, Jintai Holdings, Yimai Sunshine, and UBTech. Among these, companies with participation from both brokerages include UBTech and Yimai Sunshine, each twice. Guotai Junan and China Merchants Bank International also participated in SenseTime’s placement in September. (Below are the companies jointly underwritten by Citic and Guotai Junan.)

Of these six stocks, only Yimai Sunshine experienced a significant decline of 52% in the past 60 days; since the beginning of the year, Youjia Innovation has fallen 17%, and UBTech has fallen 15%.

Furthermore, since 2025, Wuji Capital has participated in H-share placements of several Hong Kong-listed companies through exclusive subscriptions, including Black Sesame Intelligence, Fandian Intelligent, Weimeng Group, GCL Technology, SenseTime, and China Ruyi. Some Hong Kong analysts told Jinshi Talk that Wuji Capital likely engaged in short selling a stock and then participated in the buyback through the placement.

Among these, SenseTime and Weimeng’s main underwriters are CITIC Lyon and Guotai Junan. Following this news, SenseTime plunged 8% today, down 23.8% since February 23, while Weimeng’s decline was limited.

Is SenseTime the stock involved in insider trading? Jinshi Talk found that before SenseTime’s July placement, its stock price had been hovering at low levels for a long time. After the placement, the stock nearly doubled. The decline before the placement was not very obvious, so further verification is needed.

However, on December 18, SenseTime again conducted a placement. One and a half months before this placement, the stock price fell over 35%. The specific list of underwriters was not disclosed. At least six underwriters subscribed to 1.75 billion shares, corresponding to a market value of HKD 3.308 billion.

How about Youjia Innovation, Jintai Holdings, Yimai Sunshine, and UBTech?

1. Youjia Innovation’s stock price fell before its November 25 placement, and continued to decline afterward. Without Wuji Capital’s participation, it would be hard to profit. (The list of six underwriters was not disclosed.)

2. Jintai Holdings’ stock had been rising before its August 29 placement and continued to rise afterward, which does not fit the short-selling scenario.

3. Yimai Sunshine’s pattern is similar—its stock kept falling without profit potential, so Wuji Capital probably did not participate.

4. UBTech’s July 22 placement does not fit either; its stock had been declining before, and the placement was well-timed, with a drop of over 30% in the month and a half prior, indicating profitable short-selling. Six underwriters subscribed to 31.468 million shares, worth HKD 3.48 billion at the time.

5. Weimeng’s stock was rising before its September 18 placement, then experienced a sharp drop shortly after, making it unlikely Wuji Capital profited from shorting.

6. Guotai Junan-sponsored Fandian Intelligent’s stock rose before its July 17 placement and continued to rise afterward, which does not support a short-selling arbitrage.

7. CITIC Securities-sponsored China Ruyi’s case—whether Wuji Capital participated—is uncertain. Its August 1 placement saw a huge pre-placing rise, followed by a decline, not fitting the pattern of short-term profit from shorting or post-placement profit from subscription.

In summary, Jinshi Talk’s analysis suggests that SenseTime and UBTech may have been involved in insider trading and short-selling for illegal profits via Infini Capital. However, whether Wuji Capital participated in SenseTime’s December placement or UBTech’s November placement remains unconfirmed. Let’s wait and see how the market unfolds.

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