China stock market

Shenzhen exchange’s indices review sees troubled Leshi lose its place in ChiNext benchmark

BGI Genomics and Nanjing Hanrui Cobalt among new names in ChiNext index

PUBLISHED : Monday, 18 December, 2017, 12:55pm
UPDATED : Monday, 18 December, 2017, 12:55pm

Leshi Internet Information & Technology, the fourth-largest company on the ChiNext index, will be dropped from the gauge next year, as the Shenzhen exchange makes changes to benchmarks as part of its semi-annual review.

The financially troubled video content provider and other six firms will be replaced by companies including biotech start-up BGI Genomics and cobalt powder producer Nanjing Hanrui Cobalt with effect from January, the Shenzhen Stock Exchange said in a statement on its website on Monday.

The bourse is also making adjustments to the Shenzhen Constituent Index and the index for small and medium enterprises.

Leshi’s deletion from the 100-member ChiNext gauge could be possibly explained by its big loss for the first nine months of the year and long-standing stock trading halt, as abnormal accounting numbers and suspensions are enough reasons for removing a stock from a benchmark in regular index reviews.

The Shenzhen exchange, however, did not give an explanation for removing the stock in the statement.

Shares of Leshi have been suspended since April pending the announcement of restructuring plans. The stock last traded at 15.33 yuan, down 63 per cent from its peak in 2015.

The company, at the centre of capital seizure by its founding shareholder Jia Yueting, is set to post its first annual loss since listing in 2010. It reported a loss of 1.65 billion yuan (US$249.6 million) for the first nine months as revenue decreased because of negative impact of affiliates’ debts on the reputation of the listed unit.

The stock will be also dropped from the Shenzhen Constituent Index that tracks 500 companies on the Shenzhen exchange.

Forty-five companies will be removed from the Shenzhen Constituent Index and the same number of stocks will be added. The addition of some big companies includes Zhejiang Supor Cookware, Jiangsu Zhangjiagang Rural Commercial Bank and Nanjing Hanrui Cobalt, the statement said.