Asian Citrus Shares Fall After ‘Disorderly’ Trading (Update2)

Nov. 27 (Bloomberg) -- Asian Citrus Holdings Ltd. fell 64 percent in Hong Kong trading after the stock exchange said “disorderly” transactions prompted it to suspend China’s biggest orange plantation owner on its debut yesterday.

Asian Citrus closed at HK$7.10 on the city’s stock exchange, after being suspended at HK$19.94 yesterday. Shareholder activist David Webb said trading information displayed by the Hong Kong Exchanges & Clearing Ltd.’s computers misled investors because the data failed to reflect a 10-for-1 split in Asian Citrus stock in London.

Hong Kong’s exchange asked Asian Citrus to clarify the stock split to investors after the shares jumped eightfold, then fell more than 60 percent yesterday, the bourse’s spokesman Henry Law said today. Transactions involving almost 12 million of the fruit producer’s shares won’t be canceled because the exchange decided investors who sought to scrap the trades had insufficient grounds, he said.

The stock’s debut was “a travesty,” said Brook McConnell, the Hong Kong-based president of South Ocean Management Ltd., which owns Asian Citrus shares in London and didn’t trade the stock yesterday. McConnell said Hong Kong’s exchange had made “a mistake” and should cancel yesterday’s trades.

Stock Split

The company’s net tangible asset value per share was 37.3 yuan ($5.46) on June 30, according to its listing prospectus. By displaying this figure without noting the stock split, Hong Kong exchange’s computers may have led investors to “think that their investment is backed by 10 times more assets than it really is,” Webb said yesterday.

Hong Kong’s exchange won’t display asset value per share data for Asian Citrus on its computers today, Law said.

Asian Citrus opened at HK$51.25 ($6.61) in Hong Kong yesterday, compared with the Nov. 25 closing price of 45.75 British pence (75 cents) for the London-traded shares.

Asian Citrus’s prospectus, published Nov. 23, included details about the stock split, which was completed earlier this month, the company said yesterday.

Hong Kong exchange didn’t make a mistake because its information was from the Asian Citrus prospectus, with data as of June 30, Law said. The listing by introduction was managed by CLSA Ltd., whose spokeswoman, Mandy Ho, has declined to comment.

Asian Citrus is “ultimately responsible for the prospectus not being false or misleading,” Webb said. Still, the Hong Kong exchange and the Securities and Futures Commission, the city’s stock market regulator, “should have spotted the problem,” he said.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net