Delisting candidate Xintai sees shares soar on last trading day

Investors pile into shares of Xintai Electric despite the company sending out 50 risk alerts warning of delisting

PUBLISHED : Monday, 22 August, 2016, 9:36pm
UPDATED : Monday, 22 August, 2016, 10:35pm

Dandong Xintai Electric Co, the first company to face delisting from China’s Nasdaq-style ChiNext board, saw its share price revive to hit the daily limit on Monday, the last day it was traded on ChiNext.

Instead of shunning a company that has put out more than 50 alert statements since July reminding the market of delisting risks, investors piled into Xintai, betting that regulators might take mercy on the company and allow it to continue trading.

Investors snapped up Xintai stock as soon as the market opened on Monday, sending its shares up by the daily limit of 10.18 per cent to reach 3.03 yuan (HK$3.53) at the morning session close. Turnover in trading of Xintai’s shares stood at 57.21 million yuan at market close.

From July 12 until Monday, the company’s market capitalisation shrank by more than 2 billion yuan to 520 million yuan, but turnover during that period reached 1.18 billion yuan, according to calculations published by China Business News.

Xintai said on July 8 it received a discipline notice from the China Securities Regulatory Commission (CSRC) over falsified information disclosure ahead of and after its initial public offering (IPO), reminding investors of the risk of a delisting. The company’s shares resumed trading on July 12 after a suspension that began on May 24.

According to a press release issued by the CSRC on July 8, Xintai would undergo mandatory delisting due to fraud carried out during its IPO. Zhang Xiaojun, a CSRC spokesman, said the regulator would “clear companies like Xintai out from the capital market”. He also said companies could not apply for relisting once kicked out from the ChiNext board.

However, during a media briefing last Friday, Zhang said Xintai’s A shares would be suspended from trading starting August 23 and later be transferred to the over-the-counter National Equities Exchange and Quotations market for trading.

“That’s not a ‘clear out’ from the capital markets, and that is giving punters a reason to place risky bets,” said Jonathan Yin, who oversees a hedge fund company in Shanghai.