Anta’s Fall Shows Fragile Support for China CompaniesBloomberg News
Anta Sports Products Ltd. posted its biggest two-day drop in more than three years in Hong Kong, as the company’s denial of links to a corruption case failed to offset concern about companies’ vulnerability to a national graft crackdown.
Anta fell 8.5 percent to close at HK$13.74 after resuming trading, adding to the 7.7 percent decline before yesterday’s suspension. The two-day drop was the most since October 2011. Chairman Ding Shizhong sought to allay worries in an investor conference call yesterday, in which he denied involvement with a former government official who media reports said is under corruption investigation.
“Investors these days don’t have a lot of faith in Chinese companies,” said Tallan Zhou, a Hong Kong-based analyst at Standard Chartered Bank Plc. “They don’t really know what is going on and so they sell first and get to know if the news is true or not.”
The Chinese language site Boxun reported Dec. 3 that Ding had business dealing with a former tax official who was accused of accepting bribes. The report comes amid a nationwide corruption crackdown by President Xi Jinping, which has led to investigations into thousands of officials and the businessmen they’re connected to.
In September, Ultrasonic AG, which, like Anta, is based in Fujian province, fired its chief executive officer after he and his son went missing and most of its cash had been transferred away. He later resurfaced in China and denied absconding with the cash.
Ding “categorically denied” any involvement with the incident cited in the Boxun report, the company said yesterday in a filing to the Hong Kong stock exchange. Anta said Ding was was working as usual at the Jinjiang-based company’s offices.
The chairman spoke on a conference call with investors yesterday to reiterate the denial.
“His tone was very affirmative, he had nothing to do with this guy,” said Zhou, who was on the call and has an outperform rating on Anta’s stock. “That’s all the management can do right now. They’ve done what they can do and now it’s really up to the market to decide.”
HSBC cut the stock to underweight from overweight, citing a loss of confidence by investors and lower visibility on earnings, analysts for the bank led by Catherine Chao said in a note. “While the company has worked to promptly deny these allegations, we think it may be difficult to convince investors to regain confidence in management,” the note said.
The company reached an agreement with the U.S. National Basketball Association in October to sell co-branded shoes in China.
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