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Hong Kong regulator orders trading halt in Muddy Waters' target Superb Summit
[HONG KONG] Hong Kong's securities regulator put an indefinite trading halt on the shares of Chinese timber supplier Superb Summit International Group, a company that shortseller Muddy Waters questioned the accounts of in a report issued last year.
The Hong Kong stock exchange said in a statement on Tuesday that the Securities and Futures Commission (SFC) had invoked a rarely used provision which says the regulator can halt trading in a stock if it believes a company has given false, incomplete or misleading information, has failed to comply with SFC rules, or if the SFC deems it is in the public interest to do so.
No specific reason was given for the SFC order. Shares of Superb Summit - which has a last-traded market value of HK$12 billion (S$2.25 billion) - have been suspended since November 2014 at the request of the company following the Muddy Waters report.
Company executives were not immediately available to comment on the latest halt. When a Reuters reporter visited the Hong Kong office of Superb Summit on Tuesday, he was told by an employee that the company could not accept any interviews.
The regulator declined to comment as well. Several companies that have had trading in their shares suspended have been under investigation by the SFC.
The provision invoked by the SFC was also used to extend a trading halt in shares of Chinese solar technology company Hanergy Thin Film Power Group Ltd in July this year.
Last year, Muddy Waters questioned Superb Summit's balance sheet and the value of the assets its owns. The company has since described the allegations as "misleading".
The report by Muddy Waters, whose negative reports have decimated shares of Chinese companies listed overseas, came after a string of corporate scandals that underscored the perils of doing business in China.
Muddy Waters founder Carson Block told Reuters at the time that his company had conducted checks and was convinced that loss-making Superb Summit had little or no forest ownership.
Chinese forestry company Sino-Forest, targeted by Block in 2011, was the most prominent among a series of accounting scandals that have tainted the image of Chinese companies. The scandals have prompted trading halts, de-listings, lawsuits and regulatory probes in financial centres around the world.