Manulife drops in Hong Kong trading after short-seller Muddy Waters says trial could lead to ‘billions’ in losses
Company’s stock is in bear territory after falling by 20 per cent from January peak
Shares in Canadian insurer Manulife Financial slid in Hong Kong trading on Friday after short-seller Muddy Waters Research said an impending trial verdict could lead to “billions of dollars of losses” at the company.
The stock fell by 2.4 per cent to HK$137 on Friday, contributing to an overall drop of 20 per cent from a peak in January, which means it is technically in bear trading territory. Toronto-based Manulife Financial has more than US$849 billion in assets under management, with about 35,000 employees and 73,000 agents. It is traded on the stock exchanges of Toronto, New York, Manila and Hong Kong.
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Carson Block, who runs Muddy Waters, said in a report he believed investors were not aware of the material risks to Manulife posed by the trial. The insurer was taken to court by hedge fund Mosten Investment, which claims it should be allowed to deposit unlimited amounts of capital with Manulife and earn at least 4 per cent in annual interest based on a 1997 universal life insurance policy it owns.
Block expects a verdict this year.
Manulife said in a statement the Muddy Waters report was a short-seller’s attempt to profit at the expense of the insurer’s shareholders, and disagreed with Block’s conclusions.