China Tianrui Group Cement Stops Trading After Sell-off Annihilates Market Value

This action, which occurred during the final 15 minutes of local trading time on Tuesday, 9 April 2024, sunk China Tianrui Group Cement’s stock by 99%, and at the final bell, a share sold for 0.048HKD. According to Bloomberg, the company cited a pending announcement regarding inside information for the halt in trading.

The company’s market cap took an $18m blow when its stock plummeted. Approximately 281 million free-float shares were reportedly traded on Tuesday. Over 80 million of these were sold in the few minutes before the final gong.

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Bloomberg indicated that these incidents are a risk for companies with high shareholding densities and those that offer stock as collateral for debt. These practices are not uncommon in China. Bloomberg quoted Steven Leung, executive director at UOB Kay Hian in Hong Kong, who commented:

When there is a relatively large selling order, it is easy to trigger panic since there are not enough buyers. It could also come from margin calls if the major shareholder pledged the stocks.

Li Liufa, who according to Reuters, is the “richest man in Henan province”, and his wife owns a 70% controlling stake in China Tianrui Group Cement. Based on a January 2024 filing, the company pledged approximately 3.3% of its shares to obtain a loan of up to 166.5m CNY.

To date, China Tianrui Group Cement has not offered comments on these developments.