Second Chinese company has shares suspended


The dominoes could be starting to fall in the Chinese solar industry with reports this week that a second solar company has had its shares suspended from the Shanghai Stock Exchange.

Media reports stated electrical equipment and solar panel maker Baoding Tianwei Baobian Electric has had trading in its shares frozen after reportedly announcing a second successive year of losses on Monday.

The transformer maker’s English website offers no information on the financial state of the Hebei province-based manufacturer but Businessweek on Tuesday carried a Bloomberg News report that Baoding Tianwei Electrical on Monday revealed net losses of CNY5.23 billion (US$850 million) for 2013, up from CNY1.55 billion a year earlier.

Back-to-back losses meant the company’s shares suffered the same fate as those of Chaori Solar, which suffered China’s first domestic default last week, sparking fears the assumed safety net offered publicly listed companies by the Chinese authorities had been withdrawn with commentators predicting devastating effects for the country’s sprawling, heavily indebted solar market.

Shares have tumbled 37% in 12 months

The Bloomberg report stated the Shanghai exchange will decide within seven trading days – by Thursday – whether shares in Baoding Tianwei Electricals, which have plunged 37% in 12 months, will continue to be suspended until the company’s losses are reversed.

With the company’s 2011 prospectus stating the state-owned Baoding Tianwei Group – Electrical’s controlling shareholder – would provide a ‘full, unconditional and irreversible’ guarantee for its stock, according to Bloomberg, fears the rug has been pulled from under solar by the Chinese government have sparked heavy selling in another debt-driven sector – the Chinese copper industry, according to a Reuters report carried in British newspaper The Guardian on Wednesday.