Tomson shares tumble on reports of investigation into suspect sales

PUBLISHED : Thursday, 07 June, 2007, 12:00am
UPDATED : Thursday, 07 June, 2007, 12:00am

Shares of Tomson Group, a Shanghai-focused developer, dived as much as 11.93 per cent yesterday on reports the company is being investigated by the city's housing authorities for allegedly faking transactions in a luxury residential development there to boost interest and prices.

The stock fell to as low as HK$2.51 after the state-controlled Xinhua news agency quoted the Shanghai Housing, Land and Resources Administration Bureau as saying that company subsidiary Tomson Haijing Garden (Shanghai Pudong New Area) has been accused of 'reserving apartments for speculation purposes, fraudulent dealings during the selling process and self-sensationalising'.

The stock was down 10.53 per cent at HK$2.55 at the end of the morning session before trading was suspended pending the release of a company announcement.

Representatives of Tomson - which is 56 per cent controlled by the family of chairwoman and managing director Hsu Feng, a former Taiwanese actress - were unavailable for comment yesterday.

Declining to be named, a saleswoman from Tomson Riviera, the Pudong financial district development in question, rejected the allegation and said she was unaware of the investigation.

'We are still conducting sales as usual,' she said.

An official of the housing bureau confirmed that Tomson and two local firms were being investigated but would provide no further details.

According to the report, since being launched in October 2005, the 220-unit Riviera has secured only three purchase contracts while another three have been cancelled, giving it the highest cancellation rate in the market.

The figures are backed up by the city's official property transaction website

Property consultants said the news reaffirmed the city's determination to regulate the property market, which has experienced a boom since the beginning of the year after two years of stable growth.

'Instead of imposing new measures, the government this year will focus on cracking down on irregularities and malpractice by developers and property agents,' said Jacky Fung, the general manager of Midland Realty's Shanghai branch.

'The Tomson case is a warning to other developers.'