Bond default by China’s best-performing stock this year sends shares slumping in Shanghai
- Shares of Wintime Energy, which had surged 60 per cent this year until Friday, fell almost 10 per cent in trading on Wednesday after it said that it had defaulted on a bond payment
The one-way ride on the most speculative stock on China’s market this year seems to be unravelling.
Shares of Wintime Energy, the best performer on the CSI 300 Index with gains exceeding 60 per cent in 2019, tumbled by as much as 9.8 per cent to 1.84 yuan in Shanghai on Wednesday. About 535 million shares of the coal producer changed hands, more than six times its 180-day average, according to data compiled by Bloomberg.
The sell-off was spurred by an overnight exchange filing from Wintime that it had defaulted on bond repayments of 1 billion yuan (US$147.2 million) maturing on Tuesday. While such news is normally enough to trigger selling, the bond default was not totally unexpected from the company, which was China’s second-largest defaulter in 2018 with outstanding debts totalling 63.2 billion yuan.
The sudden turnaround in Wintime’s shares, an obscure coal producer in the northwest province of Shanxi, caught traders off guard, sending a reminder to global investors that the world’s biggest emerging stock market is still quite dominated by retail sentiment.
Even after Wednesday’s loss, the stock is still up 37 per cent so far this year. It had slumped 60 per cent in 2018 and was one of the top 10 losers on the CSI 300.