[THE INVESTOR] China Ocean Resources, the only Chinese company trading on Korea’s main bourse KOSPI will be delisted due to disclosure irregularities, according to the local stock market operator on Sept.13.
The Korean Exchange (KRX) said the process will begin next week, with the official delisting on Sept. 27. With the removal, 14 Chinese companies remain listed in Korea.
The move comes about a month after Shinhan Accounting declined to conduct audits over allegations that the company’s CEO Zhang Huoli issued fabricated disclosures to help his friends buy stocks at below market rates. It was Shinhan’s second disclaimer since April when the auditor said it could not secure documented evidence to support China Ocean Resources’ cash flow and other critical financial data.
China Ocean Resources faces delisting over false disclosures
Investors will be given seven trading days to liquidate their stocks, which have been frozen at 1,000 won (US$0.88) since April. More than 24,000 retail investors were found to be holding 97 million shares in the company as of 2016. The CEO had 1 million shares, equaling 0.78 percent of the total stake. In 2009, Zhang had held a 54 percent stake, but he has been gradually offloading his shares.
China Ocean Resources made its KOSPI debut in 2009. It has made headlines several times for false disclosures. Last year, its share price tumbled after trading was suspended for more than three months on related irregularities.
“Investors have been growing cold toward Chinese companies due to the news of irregularities, and the sentiment is expected to worsen with the delisting,” an industry source said on the condition of anonymity.
Reflecting the sour sentiment, less than 20 investors showed up at the IR sessions for Cayman Golden Century Wheel Group and Rothwell International, two Chinese companies that went public in Korea last year.
By Park Ga-young (email@example.com)