July 15 (Bloomberg) -- Great Wall Motor Co., China's largest maker of sport-utility vehicles, fell the most in more than nine months in Hong Kong trading after China's securities regulator rejected its Shanghai share sale application.

The automaker dropped 8.8 percent to close at HK$5.20. The China Securities Regulatory Commission didn't give a reason for its ruling in its statement late yesterday.

The veto may force the maker of Hover SUVs to borrow money to help fund 2.8 billion yuan ($410 million) of investments, as it works on developing more fuel-efficient models. The automaker has plunged 54 percent this year on concerns higher fuel costs may damp demand for larger vehicles.

``Raising funds from a mainland market share sale is cheaper than bank loans and cheaper than raising funds in Hong Kong,'' said Zhang Xin, an analyst at Guotai Junan Securities Co. in Beijing. ``Rising fuel prices are hurting SUV-makers and that contributed to the rejection, along with Great Wall's large cash pile.''

The automaker, based in the northern city of Baoding, still has 1.1 billion yuan of cash left over from its Hong Kong IPO and its debt ratio is well below the average of publicly traded automakers, said Li Dan, an analyst at China Galaxy Securities Co. in Beijing.

Sale Rejections

Great Wall was one of three companies to have a share sale application rejected yesterday, as China moves to slow the release of new equities. Concerns about a flood of new shares have helped cause the benchmark CSI 300 Index to plunge 47 percent this year.

So far this month, about 45 percent of sale applications have been blocked, heading for the highest rate this year, according to Bloomberg calculations based on information from the regulator. In the first three months of the year, one out of 39 applications was rejected.

The rising rejection rate ``may be a sign that regulators are tightening up new share issues,'' said Qin Xiaobin, an analyst at China Galaxy Securities in Beijing.

Beijing Ultrapower Software Co. and Jiangsu Shentong Valve Co. both had sale applications rejected yesterday. Your-Mart Company Ltd., a retailer based in central Hunan province, won approval for its sale.

Jincheng Blue Flame Coal Industry Co., China's second- largest anthracite coal producer by output in 2006, had an application for an initial public offering rejected in April.

Dongfeng Motor Group Co., China's third-biggest automaker, fell the most in almost four months today in Hong Kong to close at HK$3.22. The stock has plunged 41 percent this year, lagging the 24 percent decline of the benchmark HSI Index.

``The market is so weak that investors are selling at any negative news in the market regardless whether it is relevant or not,'' said Vivien Chan, an analyst at SinoPac Securities (Asia) Ltd. in Hong Kong.

To contact the reporter on this story: Tian Ying in Beijing on ytian@bloomberg.net

Last Updated: July 15, 2008 04:55 EDT