By now virtually every trader has personally experienced or participated in a flash crash, whether in FX (most recently two weeks ago when numerous Yen carry pair suddenly tumbled), in stocks or in bonds. But few have observed a flash crash which itself sparks a domino effect of more flash crashes.
That's precisely what happened in Hong Kong overnight, when a string of local stocks plunged without warning and without any news in afternoon trading, the second perfectly unpredictable flash crash in two weeks leaving investors nursing massive, and unexplained, losses in the world's fourth-largest equity market.
Jiayuan International Group, Sunshine 100 China Holdings and Rentian Technology Holdings all plunged over 75% in a matter of minutes and at least 10 companies by at least 20% or more by the close, wiping out nearly $5 billion in market value. Most of that came from Jiayuan, which lost HK$26.3 billion on record volume according to Bloomberg.