KUALA LUMPUR: Promoters and major shareholders of China-based companies listed on Bursa Malaysia are trimming their shares.
At a time when China firms are talking of billions in investments in Malaysia, this sell-off trend is rattling the confidence of local investors.
Except for HB Global Ltd and Maxwell International Holdings Bhd, most promoters have been selling some of their stakes since the IPOs, The Edge reported.
The Edge noted a trend where not too long after their IPO exercises, the share prices of these China-based firms started to nosedive, perhaps because of these share cutbacks.
It named several companies, including China Automobile Parts Holdings and China Stationery Ltd, where the major shareholders have reduced their shareholdings.
China Stationery Ltd executive chairman and CEO Chan Fung’s stake in the plastic stationery manufacturer has dropped from 74.88% post-IPO to 12.32% today.
China Automobile Parts Holdings Ltd founder Ong Juan Tee used to have a 54.4% stake post-IPO, but now has only 5%, having sold 40 million shares off market in September 2015.
The Edge reported that Kanger International Bhd managing director Leng Xingmin’s stake in the bamboo flooring maker had dropped from 55.17% post-IPO to 24.45%.
It noted that Chan Kai Fly, Lin Huozhi and Ding PengPeng, the promoters of K-Star Sports Ltd, Multi Sports Holdings Ltd and XiDeLang Holdings Ltd, had cut their stakes from more than 50% to about 30%.
According to the report, if a major shareholder dumps his shares, the company’s share price is likely to be hit hard.
In addition, when a major investor exits, the minority shareholders may see it as a sign of trouble and start selling their shares, pushing down the share price even more.
XingQuan International Sports Holdings Ltd, the first China-based firm to be floated on Bursa Malaysia in July 2009, was listed at RM1.71. On June 2, it was traded at a historical low of only 4.5 sen, The Edge reported.
HB Global and Maxwell are the only two China-based entities that have seen their promoters either maintain their holding or increase their stakes.
HB Global CEO Shen Hengbao has been maintaining his stake in the gourmet convenience food maker at 57.09% since its IPO while Maxwell founder and president Jenny Li Kwai Chun has even raised her stake in the shoemaking firm from 54.5% to 58%, The Edge reported.