Update | Short-sellers take aim... and maul Hong Kong-listed Man Wah Holdings and Dali Foods Group
Furniture maker Man Wah Holdings and Dali Foods Group plunge in Hong Kong trade after bearish research firms names the companies as short-selling targets
Hong Kong-listed stocks Man Wah Holdings and Dali Foods Group were named as short-selling targets by two influential research firms on Wednesday, sending their shares tumbling in afternoon trade.
Furniture maker Man Wah’s shares plunged 10 per cent to HK$6.03 before they were suspended from trade after Muddy Waters Research LLC, one of the most prominent short sellers in the global financial markets, put out a note predicting a decline in the company’s stock price.
Man Wah, founded in 1992, has 48 per cent more debt than it had disclosed, Muddy Waters’ founder Carson Block said during the Sohn Conference in Hong Kong.
Short interest on Man Wah’s shares, which closed 8.6 per cent lower on Tuesday, rose to a three-year high of 2.9 per cent of its free float, according to Bloomberg data.
The stock, trading at HK$7.01 before Block announced his findings, plunged as much as 15.4 per cent within minutes of the short-seller revealing its latest target.
Man Wah is estimated to generate more than half of its net income through Macau, according to Block who also raised questions over its tax inconsistencies, exports data and sales growth in China.