A sell-off of Shanghai Pharmaceuticals' stocks showed signs of abating yesterday after management denied it was being investigated by Hong Kong and mainland securities watchdogs over alleged accounting fraud.
Stock of the second-largest drug distributor on the mainland fell more than 7 per cent before closing at HK$9.10 in Hong Kong yesterday. The selling pressure seemed to ease somewhat after the company denied receiving any notice of a probe by regulators and stating that its accounts comply with set standards.
It tumbled 24 per cent on Wednesday after reports that the firm was being investigated by the China Securities Regulatory Commission and the Hong Kong stock exchange over accounting manipulations connected to three acquisitions.
Shanghai Pharmaceuticals' major shareholders, including Temasek Holdings (Private), National Social Security Fund, JPMorgan Chase and Morgan Stanley, have suffered huge losses on their investment in the company as the stock has dropped more than 60 per cent from its debut in May last year.
The National Social Security Fund, one of the cornerstone investors of the drug firm, has seen a paper loss of HK$925 million on its 9.12 per cent stake, or 66.6 million shares. Temasek is estimated to have lost at least HK$1.5 billion with its 16.19 per cent stake. It had acquired 13.6 per cent during an initial public offering.
The losses incurred by Morgan Stanley, which holds an 8 per cent stake, and JPMorgan, with 10 per cent, are hard to calculate as they bought the shares at different times and at various price levels.
