[HONG KONG] Hong Kong's stock watchdog said trading in China Huishan Dairy Holdings Co shares can't resume without its approval.

Huishan's shares have been frozen since they tumbled 85 per cent on March 24. The Securities & Futures Commission will need to give the go-ahead for any resumption of trading, under a rule that allows the market regulator to halt shares when there's evidence of misleading, false or incomplete information.

The SFC invoked the same rule against Hanergy Thin Film Power Group Ltd in 2015 in the wake of a similar one-day plunge.

The news is the latest challenge for Huishan, which has turned into a poster child for weak corporate governance and the dangers of leverage in China.

Chairman Yang Kai has lost his board of directors, after two executive directors last month joined a flood of departures since the stock's collapse. Huishan hired Deloitte Advisory of Hong Kong in April to analyse its financial position.

The suspension means shareholders can no longer transfer their shares through over-the-counter trading, according to Castor Pang, head of research at Core-Pacific Yamaichi in Hong Kong.

"There's nothing shareholders can do," said Mr Pang. "If the SFC is suspending the shares, shareholders would not be able to transfer the title and register with the company registry. The SFC during the last 10 years hasn't done this very often."

The sight of multi-billion dollar stocks collapsing in minutes in the city has deterred investors and raised questions about Hong Kong's role as one of Asia's premier trading hubs. Huishan's plunge wiped out US$4.1 billion of market value in less than 90 minutes.

Hang Fat Ginseng Holdings Co, Hanergy 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 per cent in 17 minutes in July, while Hang Fat Ginseng plunged 91 per cent in an hour in January 2016.

Eight months before that, solar panel manufacturer Hanergy dropped 47 per cent, wiping out US$19 billion of market value in 24 minutes.

Hanergy shares remain halted. The Chinese solar-equipment maker reached a deal with the SFC in January on the requirements and procedures for a resumption of trading.

The agreement came after the SFC said it was seeking court orders to disqualify the company's four directors and the former chairman, Li Hejun.

BLOOMBERG