The China Securities Regulatory Commission has begun a formal investigation into irregular trading of shares of Zhejiang Hangxiao Steel Structure after the stock tripled in two months, underlining risks behind the mainland's stock market boom. The stock fell its 10 per cent daily limit yesterday after the Shanghai-listed building materials maker said the CSRC was investigating 'suspected irregularities' and its intention to co-operate. The stock had gained the daily limit in 12 of the previous 13 trading sessions after the company announced that it won a 34.4 billion yuan building contract for public housing projects in 12 Angolan cities on March 13. Industry insiders and media reports were sceptical of the company's ability to take up a such a contract and cast doubts on the stock's unusual movement, which surged its daily limit for six consecutive sessions before the announcement. The value of the Angola contract, which is worth 10 per cent of the African nation's gross domestic product, is 23 times the Hangzhou-based company's revenue in 2005 and five times the mainland's entire exports to Angola last year. 'Hangxiao seems to have told too big a story,' said Charlie Chen Jialin, the head of portfolio management at Fortis Haitong Investment Management. Hangxiao on Monday said its lawyer confirmed that the Angola contract was legally binding, and the firm had received its first instalment of US$6.47 million from its partner to buy raw materials. Still, the company failed to clear speculation that some investors received the news before the official announcement, bought the stock and benefited from the subsequent price surge. Funds that bought the stock mainly came from securities accounts based in Zhejiang province, Hangxiao's home base, according to mainland media reports. 'It's likely that Hangxiao's shares were manipulated by some funds,' said Wang Sheng, a strategist at Haitong Securities. 'The surge in stock price wasn't supported by any fundamental factors.' Shares in Hangxiao fell 1.48 yuan to 12.41 yuan yesterday. The stock has gained 281 per cent so far this year, making it the seventh-best performer on the Shanghai exchange. However, Mr Wang said such probes by the CSRC were unlikely to clamp down on stock speculation, although the regulator was expected to issue more measures to shore up corporate governance. 'The market needs some time to mature,' he said.