David Fickling, Columnist

No Crying Over Huishan's Spilt Milk

Don't blame the market for this debacle, and spare a cheer for small investors.

March 28, 2017 at 7:30 AM UTC

David Fickling is a Bloomberg Opinion columnist covering climate change and energy. Previously, he worked for Bloomberg News, the Wall Street Journal and the Financial Times.

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If there's one thing more extraordinary than the 85 percent slump in China Huishan Dairy Holdings Co. shares last Friday, it's the 0.4 percent decline in the stock over the previous three months.

Investors minded to take a bearish view of Huishan would have found plenty of fodder -- figuratively and literally1490672987797 -- in the Dec. 16 report from short-seller Muddy Waters Research, which concluded the company was "worth close to zero." (Huishan said allegations in the report were groundless and contained misrepresentations.) Despite this, Huishan's Hong Kong-listed shares modestly outperformed those of China's second-largest milk producer, China Mengniu Dairy Co., from that date, right up until the moment they lost $4.1 billion in 90 minutes.