The explosive run in small-cap (and even smaller) Chinese equities continues to some degree on Monday. Quhuo (NASDAQ:QH) is the latest name on the bulls’ list, with QH stock up 102% at last glance.
At session highs, shares were up a staggering 264%. As of 2:00 p.m. Eastern, shares had changed hands more than 57 million times. That’s easily a record for QH stock, which previously had a daily trading volume record of about 13.5 million shares from Nov. 15.
So what’s got the stock moving?
Last week, a number of small Chinese equities listed in the U.S. exploded higher.
U Power (NASDAQ:UCAR), AGBA Group (NASDAQ:AGBA) and AMTD Digital (NASDAQ:HKD) enjoyed nice gains. However, TOP Financial (NASDAQ:TOP), Huadi International (NASDAQ:HUDI) and Magic Empire Global (NASDAQ:MEGL) all gained more than 300%!
Most of these stocks sported market capitalizations under $400 million. While small by most standards in the investment world, they are not microscopic by any means. On the other hand, QH stock is significantly smaller, weighing in with a market cap of roughly $15 million.
Is QH Stock Any Different?
Last week, the conclusion was that momentum traders and investors were sniffing out low-volume, low-market cap Chinese equities. That appears to be at play here with Quhuo as well.
This observation is driven home by the simple fact that Quhuo has just 6.17 million shares outstanding. When it comes to the float, just 1.23 million shares are available.
A week ago, Quhuo announced a partnership with Baidu (NASDAQ:BIDU) “to gain access to their recently unveiled ERNIE Bot.” More from the release:
“Quhuo will soon have full access to the massive capabilities of ERNIE Bot, which can interpret human languages and deliver accurate, logical, and fluent responses almost on a par with humans.
“This strategic collaboration marks Quhuo’s commitment to harnessing cutting-edge AI technology that can empower multiple business scenarios including front, middle, and back-office functions, while continuing to innovate based on its existing technology solutions.”
Adding the artificial intelligence (AI) bit in there certainly helps get the bulls amped up, but given that this news is a week old should raise some question marks as to why QH stock is rallying today.
My guess is that it has more to do with “Chinese small-cap stocks surge in meme-like rally,” than it has to do with an AI-related or fundamentally inspired catalyst.
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On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
