Leshi halts trading due to 'excessive volatility'
Shenzhen-listed Leshi stopped trading this afternoon because of “excessive volatility”, the firm said today in a statement while media reported that Sun Hongbin, chairman of Leshi, will step down.
Rumors have been swirling that Leshi is facing bankruptcy as it faces heavy debt and cash flow problems. Its shares surged 7.1 percent to close at 6.60 yuan (US$1.05) in the morning session, following a rise by the 10 percent daily cap on Tuesday.
Leshi fell by the daily 10 percent cap over 11 trading days since it resumed trading last month. Its accumulation of heavy debts forced Leshi, which was a flagship firm in the Nasdaq-like GEM or Growth Enterprise Market, to stop trading in April.
Market whistleblowers said yesterday that Leshi had applied for bankruptcy.
Leshi was set to post a loss of 11.6 billion yuan in 2017, compared with a net profit of 554.8 million yuan in 2016, because of “capital shortage and liquidity problems,” the company had said previously.
Sun, chairman of property developer Sunac China, became Leshi's chairman after Sunac invested about 15 billion yuan in the firm last year.
Jia Yueting, Leshi’s former chairman, is seen as being responsible for the heavy debt after an aggressive business expansion into the electric car and smartphone markets. Although Jia, who is in the United States, is still the top shareholder of Leshi his stake is likely to shrink with the price tumble, according to analysts.