HK$3.5 billion, a price too high for gagging journalist Chen Yongzhou?

Muckraking journalist Chen Yongzhou was detained in Guangzhou last week on suspicion of “harming the commercial reputation” of Zoomlion, China’s second-largest maker of construction equipment. It turns out, however, that his detention has done much more harm to the company than the articles he wrote.

Two days ago, the front-page of the New Express, the newspaper Chen writes for, carried the first of two editorials questioning a police decision in Hunan province to pursue criminal charges against him for his reports on Zoomlion. The company is a major manufacturer in the provincial capital Changsha.

Zoomlion, which is listed in both Shenzhen and Hong Kong, saw its stock price tumble as other newspapers joined the New Express in a campaign for Chen’s release.

In Hong Kong, the company’s share price tumbled more than 9 per cent in two days, losing about HK$930 million in market capitalisation. In Shenzhen, the loss amounted to around HK$2.5 billion. The company lost HK$3.46 billion, including unlisted shares, in market capitalisation over the two days, until the campaign was halted by order of the Propaganda Department.

Chen has written a series of articles on Zoomlion over the last 18 months. One, which he wrote in May, suggested the company falsified sales figures. It led to a drop of 5.4 per cent in the share price – pulling it to its lowest level in two years.

Yet, on average, his reports failed to harm the company’s reputation among investors. Zoomlion’s share price actually rose nine times out of twelve on the Hong Kong exchange on days he published an article about the company.