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China firm reins in platform blamed for stock chaos
[SHANGHAI] A Chinese technology firm linked to e-commerce giant Alibaba said Thursday it was putting new limits on a financing platform reports say facilitated margin trading, blamed for the boom and bust in China's stock market.
Hundsun Technologies' platform, called HOMS, originally aimed to connect companies seeking private equity investment with financial institutions and other lenders, according to Hundsun's website.
But state media say the platform was used to help provide financing for margin trading - which allows investors to use borrowed funds to trade stocks with only a small portion of money as deposit - outside official channels.
Hundsun has ordered a subsidiary to shut down several of the platform's functions, including capital increases and new account openings, it said on Thursday in a statement to the Shanghai stock exchange, where it is listed.
Alibaba affiliate Ant Financial holds a 20 per cent stake in Hundsun.
The moves, which include Hundsun shutting any accounts with zero balances, came after the China Securities Regulatory Commission on Monday announced an investigation into the company with law enforcement authorities.
Hundsun on Monday denied allegations it played a role in recent stock market turmoil, which has seen the benchmark Shanghai index rise 150 per cent in a year then plunge 30 per cent in three weeks after peaking in June.
Alibaba founder Jack Ma also denied any role in the market rout.
Hundsun warned investors that the issue will affect its results for the first half of this year, according to the statement.
Hundsun stock was down 9.94 per cent on Thursday afternoon in Shanghai.