Techtronic rejects short-seller’s report as stock rebounds from US$4 billion sell-off in Hong Kong
- The stock jumped by as much as 8.1 per cent in early Friday trading, after sinking 19 per cent on Thursday
- Little-known Jehoshaphat Research is shorting the stock, alleging the Hong Kong company inflated its profits
The stock jumped by as much as 8.1 per cent to HK$81 on Friday, before closing at HK$78.25. The stock sank 19 per cent on Thursday, the biggest rout since a 22 per cent plunge in November 2008.
In a report published on Wednesday, Jehoshaphat Research questioned how Techtronic’s historical profit margin could be consistently higher than its peers in a cyclical industry, alleging that it could be achieved by accounting irregularities. The short seller said that Techtronic’s shares would slump by as much as 80 per cent.
“The company vigorously denies all the allegations made in the report as it contains multiple defamatory, biased, selective, inaccurate and incomplete statements,” Techtronic said in a stock exchange filing on Thursday. “The report contained misleading statements and unfounded allegations,” it added.
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As mainland China reopens, what is the market outlook for the mainland and Hong Kong?
Reports by short-sellers, with many targeting Chinese companies, usually cause outsized losses as traders dumped affected stocks indiscriminately. Sino-Forest went into bankruptcy after Carson Block’s Muddy Waters shorted the stock in 2011, alleging fake accounting.
