A booth for Hanergy Thin Film Power Group at an exhibition in Beijing in April Photo: CFP

Hanergy CEO Li Hejun. Photo: CFP

 

Shares in Chinese solar-panel maker Hanergy Thin Film Power Group were suspended in Hong Kong on Wednesday after they plummeted by 47 percent in the morning.

Shares in the company, which is controlled by Beijing-based Hanergy Holding Group, fell to HK$3.91 ($0.50) on the Hong Kong Stock Exchange within 30 minutes of the market opening.

Hanergy requested suspension of trading at 10:40 am, citing the impending release of an announcement "containing inside information," according to a stock exchange filing Wednesday.

Reuters reported on Wednesday that the company has been under investigation by Hong Kong's market watchdog for alleged market manipulation, citing a source familiar with the matter.

The Securities and Futures Commission (SFC) has been investigating the company for several weeks, the source was quoted as saying by Reuters.

Hanergy's PR representative declined to comment on the investigation when contacted by the Global Times.

The Hong Kong Stock Exchange declined to comment.

An employee of Hanergy, who wished to remain anonymous due to the sensitivity of the matter, told the Global Times on Wednesday that short-selling might be the reason for the share price collapse.

"I don't think today's plunge has anything to do with the company's fundamental operations but it might be associated with some short-sellers," the employee said, adding that the company had suffered from malicious short-selling between December 2013 and early January 2014, which had resulted in suspension of trading for 20 days.

"The sell-off today seems to be related to short-selling by a Canadian investment institution," the Hanergy employee noted.

However, some investors suspect there might have been inside trading in the company's shares.

"I believe this is a case of inside trading," a veteran investor in the Hong Kong market told the Global Times on condition of anonymity on Wednesday. "If the regulator looks into the case, they will definitely find some problems."

This is not the first time this year the company has faced allegations about stock manipulation. On April 4, the company's CEO Li Hejun denied there had been any intentional manipulation of stock prices by the firm's controlling shareholders and said recognition of the company's prospects was the reason for its high market value, Xinhua News Agency reported in April.

"Unlike some other companies, whose shares have been boosted by news [about deals or acquisitions], there have been few stories about Hanergy, apart from the rise in its shares," the investor claimed.

Concerns about stock manipulation were partly due to the surge in the company's shares in recent months. 

The company's shares in Hong Kong had soared more than 310 percent over the past six months, prior to Wednesday's collapse, while the benchmark Hang Seng Index had risen by just 17.7 percent during the same period.

The surge gave the company the biggest market valuation among thin-film solar power enterprises worldwide, and also made the CEO, who owns more than 50 percent of the shares, the richest man in China at one point.

As the company lost 47 percent, or HK$144.3 billion, of its market capitalization due to Wednesday's sell-off, Li's personal wealth halved from HK$248 billion to HK$131 billion.

Meanwhile, the CEO did not attend the company's annual meeting in Hong Kong on Wednesday, but instead attended the opening ceremony for a clean-energy exhibition in Beijing, according to media reports.

In a stock exchange filing on Wednesday evening, the company released no information regarding the stock suspension but announced poll results of the company's annual general meeting, including the re-election of Li as the company's CEO.

Some analysts pointed out that Hanergy may have been affected by a recent slump in shares in US-listed Chinese solar company Yingli Green Energy. Shares in Yingli plunged by 37 percent on Tuesday in New York amid worries about the company's debts.

Yingli on Friday reported a year-on-year decline of 3.7 percent in its 2014 net income and a 26 percent increase in its total debts.

Yingli said in a statement sent to the Global Times on Wednesday that some media reports had taken its annual report out of context and had raised doubts about the company's ability to manage its debts.

Chen Qingqing contributed to this story