By Sinéad Carew
(Reuters) - The popularity of non-fungible tokens (NFT), a type of digital asset that is authenticated by blockchain, is spreading to equities as investors turn their focus to shares of online art trading platforms and companies making NFT-related announcements, sparking outsize swings in their stocks.
Excitement around NFTs has exploded during the pandemic, as enthusiasts spend enormous sums of money on artworks and other items that exist only online, with some selling for tens of millions of dollars. That appears to have fired up interest in companies that may have a connection to the NFT world.
Shares of shipping and logistics company Sino-Global Shipping America (NASDAQ:SINO) Ltd have risen more than 300% this year. The company in recent weeks has said it would accept bitcoin as payment and made other announcements related to cryptocurrencies and blockchain.
Sino-Global, which has a market capitalization of around $123.4 million, said on Thursday it will launch an exchange for NFTs with e-commerce public chain CyberMiles. Sino-Global shares rose by more than 33% before closing down 0.4% at $8.54.
Shares of pipe maker ZK International Group finished up 0.8% at $8.77 after rising as much as 20% on Thursday. ZK announced earlier in the week that its subsidiary xSigma Corp would develop an NFT marketplace where users could buy and sell NFTs and create custom assets in a few clicks. Its stock is up almost 240% this year.
Investors were also betting that art-related companies would profit from NFT, sending shares of art trading platforms Takung Art (K:TKAT) and Oriental Culture Holding gyrating.
Takung U.S. shares closed up 33% at $30.06 after notching big swings. The stock is now up 1,900% year-to-date.
Oriental Culture's shares rose as much as 60% on Thursday before closing down 4.2%; they have gained 107% year-to-date.
Outside of the stock market, the trend has brought big profits to some artists and collectors.
Last month, musician and artist Grimes, who is the romantic partner Tesla (NASDAQ:TSLA) Chief Executive Elon Musk, sold some animations she made on a website called Nifty Gateway for more than $6 million.
Earlier this month, a $70 million digital-only artwork was auctioned by Christie’s to a crypto asset investor who goes by the pseudonym “Metakovan.”
Some investors said the run on NFT-related shares echoes a 2017 rush https://www.reuters.com/article/uk-stocks-cryptocurrency-analysis/cryptocurrency-stocks-holding-gains-despite-bitcoin-pullback-idUSKBN1EG24P into the stocks of companies making blockchain or cryptocurrency announcements, including Long Island Iced Tea Corp, a beverage maker whose shares soared after it said it would rebrand itself Long Blockchain Corp.
Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh, said the interest in companies involved in digital assets is "largely driven by the people that think they missed bitcoin."
"Buying the companies offering NFT would be like buying companies that have some sort of dealings with bitcoin in the early days," Forrest said.
But the money manager was skeptical about how well NFT would fare in the long run: "This is the electronic version of a Beanie Baby – remember that craze?"