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Credit China Fintech stumbles after short seller report; shares halted
[HONG KONG] Hong Kong-listed Credit China FinTech Holdings halted trading after falling 5.3 per cent on Tuesday following the publication of a report by short seller research firm Anonymous Analytics alleging it has misled investors.
The report alleges that Credit China, which is listed on Hong Kong's Growth Enterprise Market (GEM), misled investors over its purchase of a 35 per cent stake in a Shanghai company made earlier this year, which it said was an independent third-party but which Anonymous says was in fact a related entity.
"We believe that Credit China has misled investors by engaging in a number of questionable or otherwise undisclosed related-party transactions designed to funnel money out of the company and/or inflate earnings," Anonymous Analytics said in the report published via Twitter.
A spokeswoman for Credit China, which provides internet-based financing and has a market capitalisation of about US$2 billion, declined to comment.
Anonymous also alleges that Credit China over-valued a Shanghai property developer it purchased in 2013, and that intraday trading patterns in the stock had been unusual.
"Accordingly, we think Credit China is just another company with a share price value dictated more by end-of-day trading manipulation than business fundamentals," the report says.
Hong Kong Securities and Futures Commission head of enforcement Tom Atkinson said last month the regulator had established a new team to investigate irregularities in the GEM market.
Anonymous Analytics, best known for its 2014 report on Tianhe Chemicals Group Ltd, said it holds no direct or indirect interest or position in the stocks it covers, but its affiliates or clients may do.