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Shares of two Hong Kong-listed firms plunge 50% Hanergy says in 'good financial' position despite share plunge
(about 4 hours later)
Shares of two Hong Kong-listed companies have plunged by about 50% in the past two days, surprising market watchers across the region. The parent of Chinese solar panel manufacturer Hanergy Thin Film Power said the firm is in good financial condition despite its Hong Kong-listed shares nearly halving on Wednesday.
On Wednesday, shares of Chinese solar power manufacturer Hanergy Thin Film were suspended after falling 47%, wiping out $18.6bn (£11.9bn) from its market capitalisation. Shares of the subsidiary were halted from trading after dropping 47%, wiping out $18.6bn (£11.9bn) from its market capitalisation.
That was followed by shares of Goldin Financial, which fell 55% on Thursday. Hanergy Group said it had not sold any of its 30.6 billion shares in the firm.
Both firms had seen the price of their shares surge over the past year. But the group did not address reports that the firm is being investigated.
Shares of Goldin Financial, which is 70%-owned by Hong Kong billionaire Pan Sutong, have jumped by more than 400% between September 2014 and March this year, according to Reuters. Reuters had reported that the solar panel company was being investigated by Hong Kong's securities regulator, quoting an unnamed source.
The firm had said that it was not aware of the reason behind the big jump in its share price. The Securities and Futures Commission (SFC) has declined to comment.
About half of Goldin's value - $16.12bn - was erased on Thursday as shares fell. Hanergy Group, controlled by Chinese billionaire Li Hejun, issued a statement to the Hong Kong Stock Exchange on Wednesday saying its shares had been halted from trade "pending the release of an announcement containing inside information".
Meanwhile, Hanergy shares had risen five-fold since September before the sell-off began. Local reports also said that Li, chairman of the firm, did not attend the firm's annual general meeting in Hong Kong on Wednesday.
The firm, controlled by Chinese billionaire Li Hejun, had issued a statement to the Hong Kong Stock Exchange on Wednesday saying its shares had been halted from trade "pending the release of an announcement containing inside information". Li has been considered one of China's richest men because of his stake in Hanergy.
Li has been considered one of China's richest men on the back of his stake in Hanergy. In a Chinese language statement on its website, the group said it had not engaged in any financial derivative trading, using its shares in the Hong Kong listed unit.
The company lost half of its market value of nearly $40bn in 24 minutes on Wednesday.
Its shares had risen five-fold since September before the sell-off began.
Market speculationMarket speculation
Nicholas Teo, market analyst at trading firm CMC markets said he had noticed the dramatic drop in Hanergy's shares right away because it had everyone "scratching their heads".Nicholas Teo, market analyst at trading firm CMC markets said he had noticed the dramatic drop in Hanergy's shares right away because it had everyone "scratching their heads".
"The company was very quick to call a halt to the trading, but without any news, there is plenty of speculation and potentially room for further reaction to the downside if the trading suspension is lifted," he said."The company was very quick to call a halt to the trading, but without any news, there is plenty of speculation and potentially room for further reaction to the downside if the trading suspension is lifted," he said.
"Even after the drop though, Hanergy's shares are basically twice as expensive as some of the firms in that sector.""Even after the drop though, Hanergy's shares are basically twice as expensive as some of the firms in that sector."
David Kuo, chief executive of The Motley Fool Singapore backed the view that Hanergy shares were overvalued.David Kuo, chief executive of The Motley Fool Singapore backed the view that Hanergy shares were overvalued.
"Hanergy is involved in the much-hyped solar-panel industry. Investors are paying $50 for every dollar of profit the company makes," he said."Hanergy is involved in the much-hyped solar-panel industry. Investors are paying $50 for every dollar of profit the company makes," he said.
"When expectation overtakes reality, reality eventually wins. The market is experiencing a dose of reality.""When expectation overtakes reality, reality eventually wins. The market is experiencing a dose of reality."
There has been speculation as to the reason why the Chinese company halted trading, with Reuters citing an unnamed source as saying the firm is under investigation by Hong Kong regulators. Another sell-off
Hong Kong's Securities and Futures Commission (SFC) has declined to make a comment. Following the dramatic move in Hanergy's share price, on Thursday shares in two companies owned by Hong Kong billionaire Pan Sutong slumping by as much as 60% in Hong Kong.
Local reports also said that Li, chairman of the firm, did not attend the firm's annual general meeting in Hong Kong on Wednesday. Shares in Goldin Financial and Goldin Properties eventually closed down more than 40%.
Goldin Financial's shares, which is 70%-owned by Hong Kong billionaire Pan Sutong, had jumped by more than 400% between September 2014 and March this year.
The firms said they were not aware of the reason behind the big fall in the share prices.
However, Reuters reported that a Hong Kong stock exchange filing showed Hanergy Thin Film Power had appointed Goldin Financial Holdings as a financial adviser in February.
Goldin was appointed to advise Hanergy on a deal where it would supply solar panels to its parent company.