Central China Securities shares plunge in Shanghai and HK as asset management products face default risks

13-Jul-2019 Intellasia | South China Morning Post | 6:02 AM Print This Post

Shares of Central China Securities tumbled in Shanghai and Hong Kong after the brokerage said two of its asset-management products worth 241.5 million yuan (US$35.1 million) may be about to default on payments to investors.

The stock had slumped 9.8 per cent to 5.22 yuan at the close on Friday in Shanghai, capping its biggest decline since May 6. The shares lost 4 per cent to HK$1.70 in Hong Kong.

The two asset-management products were backed by Minxing Pharmaceutical, a drug maker in the northeast province of Fujian, according to the National Business Daily.

In an exchange filing, Central China Securities said it had spotted the risk that the fundraiser may default on payments, and then obtained evidence of falsified documents provided by the fundraiser.

Kangmei Pharmaceutical faces 600,000 yuan fine for misstating cash position

Central Securities has already reported the case to the police, it said, without providing more details.

“The company will actively assume the responsibility of the manager of the products and take a variety of measures to urge the fundraisers to make the repayment as soon as possible,” Central China Securities said in the statement.

The case follows a slew of recent fraud cases that have rattled China’s capital markets.

Noah Holdings, the US-listed Chinese wealth manager, said this week that a 3.4 billion yuan product was in danger of default, accusing Camsing International Holdings of falsifying business contracts. Camsing’s chairwoman has been detained by police in Shanghai.

The American depositary receipts of Noah have tumbled 26 per cent in New York this week.

Two publicly traded companies, Kangmei Pharmaceutical and Kangde Xin Composite Material Group, were both found to have inflated earnings this year.

Central China Securities was ranked 70th among the nation’s 98 brokerages in terms of net income last year, according to the Securities Association of China.

The brokerage’s shares have risen 23 per cent in Shanghai this year, beating an 18 per cent gain on the Shanghai Composite Index, on expectations that the sector will benefit from increasing trade volumes on the stock market and the launch of a new board to host home-grown technology companies.



Category: Hong Kong

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