Four Chinese listed companies say major shareholders face margin calls

An investor looks at an electronic screen showing stock information at a brokerage house in Nanjing, Jiangsu province, on Jan 26, 2016.
An investor looks at an electronic screen showing stock information at a brokerage house in Nanjing, Jiangsu province, on Jan 26, 2016.PHOTO: REUTERS

SHANGHAI (REUTERS) - Four Chinese listed companies suspended trading in their shares on Wednesday (Jan 27), saying their major shareholders, who have used shares as collateral, face margin calls and will seek ways to avoid forced liquidation.

The announcement by the four Shenzhen-listed companies came after China's stock market tumbled over 6 per cent on Tuesday to 14-month lows, raising fears that further slides in equity prices would trigger more margin calls.

Zhenzhen Comix Group Ltd, Searainbow Holding Corp, Yunnan Tin Co Ltd and Fujian Guangfu Modern Household Wares Co Ltd said in separate exchange filings that their major shareholders would actively raise money, or pledge more collateral to answer margin calls.

More companies may be facing margin calls, but some may have chosen not to make public announcements, which means the actual situation could be worse than what is publicly known, official Securities Times reported on Wednesday.