Shares of China Huishan Dairy Holdings Co. Ltd.’s plunged 91.4% Friday before the company halted trading, in the largest drop ever recorded on the Hong Kong stock exchange.There may be knock on effects:
The dramatic fall came after financial regulators in northeast Liaoning province held a meeting on Thursday afternoon with 23 creditor banks to discuss Huishan’s debts, people with knowledge of the matter told Caixin. The creditor banks include Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and Ping An Bank.
China Huishan Dairy is the country’s largest cattle farms operator.. It came under the media spotlight last December when its stock was shaken after being attacked by short seller Muddy Waters, which published reports alleging Huishan’s fraudulent and overstated revenue. Huishan denied the allegations.
In June 2015, Champ Harvest Ltd., the controlling shareholder of Huishan Dairy, pledged its shares in the dairy company as collateral to obtain loans from Ping An Bank. To date, Champ Harvest’s outstanding loans with Ping An Bank total 2.1 billion yuan, and 3.434 billion shares have been pledged.