By Lawrence White
HONG KONG (Reuters) – Shares of two companies owned by Chinese billionaire Pan Sutong slumped as much as nearly two-thirds in Hong Kong on Thursday, in the second day of steep share price declines of previously high-flying stocks in the Asian financial hub.
Goldin Financial Holdings <0530.HK> and Goldin Properties Holdings <0283.HK> fell more than 60 percent in Hong Kong trading at one point, wiping about $23 billion off the value of the companies. By afternoon, they were down 40 percent.
Their apparently inexplicable tumble follows that of Hanergy Thin Film Power Group Ltd <0566.HK>, which on Wednesday dropped nearly 50 percent before being halted from trading, with a source later telling Reuters the Chinese company is under investigation by Hong Kong’s securities watchdog.
The share slides cast doubts about Hong Kong’s reputation as a global financial hub at a time of increased interest from foreign investors following the launch of a landmark trading link with Shanghai’s stock exchange last year.
Reuters could not immediately determine any link between Hanergy and the Goldin companies beyond the stock movements, and on Thursday, all three companies said they were not aware of any reason for the falls.
Hanergy’s parent company, in a statement on its website, added to the mystery surrounding the rout, saying its financials were sound and that it had not sold any of the 30.6 billion shares it holds in its Hong Kong-listed unit.
The Hong Kong-Shanghai stock trading link has brought in a deluge of Chinese funds and triggered a rally in Hong Kong stocks, but market volatility has also increased. Hanergy shares were among the top traded on the trading link.
Goldin Financial and Hanergy had seen their values climb more than four-fold since September, an increase at odds with more modest gains in underlying business fundamentals, according to an analysis of the companies’ financial statements. Goldin Property spiked almost six-fold between March and May.
The drop in Goldin’s stocks on Thursday was accompanied by a spike in trading volumes. About 26 million Goldin Properties shares changed hands compared to up to 6 million in previous sessions. Goldin Financial volumes leapt to over 12 million from the past month’s 2-3 million range.
Goldin Financial, which is 70 percent owned by Pan, is involved in providing finance to small businesses secured against their sales. It also owns vineyards in France and California.
It had a peak market value of around HK$247 billion against a first-half net profit of HK$1.4 billion.
In March, Hong Kong’s Securities and Futures Commission cautioned investors against trading in Goldin Financial’s shares, noting that just 20 investors, including Pan, owned 98 percent of the shares.
($1 = 7.7525 Hong Kong dollars)
(Additional reporting by Umesh Desai and Charlie Zhu; Editing by Muralikumar Anantharaman and Miral Fahmy)