Gome Electrical Appliances Holding said it was making inquiries into reports about the detention of chairman Wong Kwong-yu over alleged share price manipulation as trading in the company's shares was suspended yesterday.
'The company is not in a position to confirm the accuracy of the information set out in the newspaper articles,' the mainland's largest electrical appliance retailer by number of outlets said in a filing with the Hong Kong stock exchange yesterday.
Mainland media reported over the past few days that Mr Wong had been detained for making gains from manipulating share prices. Xinhua reported yesterday that Beijing city police declined to comment.
Gome said it had not received any notice or legal documents from any mainland authority regarding the allegations. It added that the company's business operations, financial position and relationship with suppliers had not been affected.
Analysts said although the chairman was not actively involved in the listed firm's daily operations, the allegations would still deal a double blow to the retailer by adding uncertainty to its business outlook and the possibility of a liquidity problem.
Investors' appetite for Gome, which had already been weakened by the mainland's waning economic strength, could deteriorate further, according to a CIMB report.
Merrill Lynch said in a report: 'Gome's suppliers and banks might ask Gome to repay the money ahead of schedule.'
