A Chinese technology firm linked to e-commerce giant Alibaba Group Holding Ltd (阿里巴巴) yesterday said that it was putting new limits on a financing platform reports say facilitated margin trading, blamed for the boom and bust in China’s stock market.
Hundsun Technologies Inc’s (恒生電子) platform, called HOMS, was originally aimed at connecting companies seeking private equity investment with financial institutions and other lenders, according to Hundsun’s Web site.
However, state media say the platform was used to help provide financing for margin trading — which allows investors to use borrowed funds to trade stocks with only a small portion of money as deposit — outside official channels.
Hundsun has ordered a subsidiary to shut down several of the platform’s functions, including capital increases and new account openings, it said yesterday in a statement to the Shanghai stock exchange, where it is listed.
Alibaba affiliate Ant Financial Services Group (螞蟻金服) — a financial services provider focused on serving small companies — holds a 20 percent stake in Hundsun.
The moves, which include Hundsun shutting any accounts with zero balances, came after the China Securities Regulatory Commission on Monday announced an joint investigation into the company with law enforcement authorities.
Hundsun on Monday denied allegations it played a role in recent stock market turmoil, which has seen the benchmark Shanghai index rise 150 percent in a year then plunge 30 percent in three weeks after peaking last month.
Alibaba founder Jack Ma (馬雲) on Monday also denied any role in the market rout.
Hundsun told investors that the issue will affect its results for the first half of this year, according to the statement.
Hundsun’s stock slumped by its 10 percent daily limit to 72.05 yuan in Shanghai yesterday, where the benchmark index added 17.48 points, or 0.46 percent, to 3,823.18.
The Shanghai Composite Index fell as much as 3.08 percent and rose up to 1.89 percent.
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, gained 27.68 points, or 1.34 percent, to 2,086.52.
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