An Unexplained 85% Fall That's Nothing New for Hong Kong Stocks

[cyclone]

An Unexplained 85% Fall That's Nothing New for Hong Kong Stocks

by Kana Nishizawa , Benjamin Robertson , and Sofia Horta E Costa
March 27, 2017, 5:01 AM GMT+8

One of the most striking things about the 85 percent plunge in Huishan Dairy Holdings Co.’s stock on Friday was how little it surprised market observers in Hong Kong.

The mysterious crash, the indefinite trading halt, the hours without a company statement explaining the move -- it was all too familiar for traders who’ve had to navigate at least three similar episodes in the past two years. 
...
Hang Fat Ginseng Holdings Co., Hanergy Thin Film Power Group Ltd. and Tech Pro Technology Development Ltd. have all suffered crashes similar to Huishan’s in the past two years. Tech Pro, a provider of LED lighting products, fell 86 percent in 17 minutes in July, while Hang Fat Ginseng plunged 91 percent in an hour in January 2016. Eight months before that, solar panel manufacturer Hanergy dropped 47 percent, wiping out $19 billion of market value in 24 minutes.
...

More details in https://www.bloomberg.com/news/articles/...ong-stocks

[YMPL]

Huishan fallout spreads as Chinese bank tumbles 10% in Hong Kong
27 Mar 2017 14:17

[HONG KONG] Jilin Jiutai Rural Commercial Bank Corp shares slumped by a record amid concern over its exposure to the embattled dairy-product manufacturer China Huishan Dairy Holdings Co.

Shares of Jiutai Bank, based in the north-eastern Chinese city of Changchun, tumbled 10 per cent in Hong Kong trading to HK$4.74 as of the city's midday break, its biggest drop since it listed 2 1/2 months ago.

A mysterious collapse in Huishan Dairy's shares on Friday that erased about US$4 billion of its market value and prompted a trading halt has hurt other firms linked to the dairy company.

Jiutai Bank is Huishan Dairy's second-biggest creditor with 1.83 billion yuan (S$372.230 million) of loans, Caixin reported Saturday. Champ Harvest Ltd, Huishan Dairy's largest shareholder, owns 17.9 per cent of the lender's Hong Kong-listed shares, data from the city's exchange show. Champ Harvest is controlled by Huishan Dairy's Chairman Yang Kai.

Investors are concerned about "how much exposure does Jiutai Bank have, and as Champ is a 15 per cent-plus holder of Jiutai Bank, what are the terms of the exposure," said Andrew Clarke, Hong Kong-based director of trading at Mirabaud.

"Are they more favourable than a normal commercial loan?"

Multiple phone calls to Jiutai Bank's headquarters weren't answered.

BLOOMBERG

Source: Business Times Breaking News

[soros]

I thought banks weren't allowed to offer loans of more than 1% of its own capital to any one borrower.???

Juitai Bank ( 06122.HK ) was IPO listed on HKEX earlier this year.( less than 3 months ago ) , see below :

JIUTAI RCB (06122.HK) Closes at $4.87, Up Nearly 7% vs Listing Price
2017/01/12 16:04

On debut, JIUTAI RCB (06122.HK) -0.460 (-8.712%) opened at $4.65 and hit the peak/ trough at $4.94/4.63. It finished the day at $4.87, up 31 cents or 6.8% against the listing price of $4.56, on volume of 23.12 million shares, on turnover of nearly $109 million. Excluding handling fees, a book gain of $310 was recorded per board lot of 1,000 shares.
(Quote is delayed for at least 15 mins.)


http://www.aastocks.com/en/stocks/analys...stock-news

[YMPL]

I thought banks weren't allowed to offer loans of more than 1% of its own capital to any one borrower.???

My understanding is 10% max of net regulatory capital. China banking regulation has been updated lately. It might be outdated.

http://pic.bankofchina.com/bocappd/repor...199869.pdf

[soros]

This reminds me of the 2008 collapse of Kaupthing Bank ( Iceland ) which had made loans to Robert Tchenguiz and his Companies to the extent of 40% of the bank's capital.

https://www.theguardian.com/business/201...z-collapse