Another Chinese company has said that a major shareholder accidentally sold its shares, increasing speculation that insiders could be testing the market before they offload their stakes.
Shenzhen Changfang Group Co (長方集團) said that Nie Xianghong (聶向紅), a shareholder acting in accord with top investor Li Dichu (李迪初), accidentally sold 16,000 shares on Friday last week by inputting the wrong ticker symbol.
The shares, which rose by the 20 percent limit for a fourth day yesterday, have more than doubled in price this month. Li owned more than 11 percent of the company before the sale.
Sany Heavy Industry Co (三一重工) on Thursday last week said that its board would fine shareholder Mao Zhongwu (毛中吾) after an unspecified “trading error” led to him offloading 96,700 more shares than he had intended to.
Days earlier, TCL Technology Group Corp TCL (科技) chairman Li Dongsheng (李東生) said that a trader accidentally sold 5 million of the company’s shares from his account.
At least three other companies, including Liqun Commercial Group Co (利群商業集團), have disclosed and apologized since late last month for executives selling shares by mistake.
The sudden wave of erroneous trades is putting the spotlight on insider dealings at Chinese firms.
Selling by major shareholders is often taken as a negative signal in China — suggesting executives are losing confidence in a firm’s prospects — and can lead to the shares declining once they are disclosed.
“The way I picture this happened was that these executives wanted to test whether it was possible to sell their shares in the open market,” Beijing Zhonghe Yingtai Management Consultant Co (北京中和應泰財顧) analyst Lu Changshun (呂長順) said. “Call them mistakes, but they were done on purpose. The executives naturally have an urge to take profit.”
Shenzhen Changfang has publicly warned investors of abnormal fluctuations in its shares. The firm, which makes LED lighting products, is among Shenzhen’s best-performing shares for this month, despite saying it suffered a net loss of 33.8 million yuan (US$4.95 million) in the first half of this year.
The Shenzhen Stock Exchange on Friday last week said that it is monitoring the shares due to the significant gains.
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