Hong Kong regulator SFC orders extension of Hanergy share suspension

Using a provision it rarely enforces, the Hong Kong securities regulator yesterday ordered the city's stock exchange to extend a nearly two-month suspension of trading in solar-technology firm Hanergy Thin Film Power Group.

In a statement, the Hong Kong stock exchange said the Securities and Futures Commission (SFC) had told it that trading in Hanergy shares could not resume without its approval.

The provision used by the SFC allows it to halt trading in a Hong Kong-listed stock if it believes the company has distributed "any materially false, incomplete or misleading information", has failed to comply with SFC rules, or if the SFC deems it to be in the public interest to do so.

The Hong Kong regulator has exercised this provision only a few times before. Exchange data show stocks subject to this provision often end up suspended for years.

Hanergy had itself asked the Hong Kong exchange to suspend trading in its shares on May 20 after the stock lost US$19 billion, nearly half of its market value, in just 24 minutes of trading. The stock has been suspended ever since. On May 28, the SFC had announced it was conducting an investigation into Hanergy's "affairs", without elaborating.

Corporate governance activist David Webb said the SFC decision indicated the commission "was making progress in its investigation [against Hanergy]".

But a regulatory source yesterday said the SFC's decision to halt the trading of a company that was already suspended of its own volition was "neutral" and that the act itself did not necessarily mean the regulator would escalate its investigation into Hanergy. "The consequence, however, is an important one. The commission becomes the key decision maker on whether trading should resume and on what terms," the source said.