FT examines curious trading pattern of Hanergy shares

The head-scratching over Hanergy Thin Film Power Group’s stratospheric performance on the Honk Kong Stock Exchange is intensifying following a sharp analysis by the Financial Times of aberrant patterns in the trading of the company’s shares.

In an article published Tuesday, the FT found that over the past two years, from the beginning of 2013 until February 2015, HTF stock consistently surged in the late afternoon, about 10 minutes before end of trading.

The FT showed its findings to a number of market experts, including Rajesh Aggarwal, professor of finance at Northeastern University in Boston. Aggarwal, who specializes in stock market manipulation cases, said such price increases in the last 10 minutes of trading was "extremely unlikely to have occurred randomly," adding that the pattern was consistent with systematic manipulation of the stock price over the two-year period.

HTF is the publicly traded unit of Hanergy Group and is 73% owned by Hanergy Chairman Li Hejun — China’s richest man. With a market capitalization of $36 billion, HTF’s value is higher than SunEdison and First Solar combined and also greater than that of Tesla — and that despite the fact that Bloomberg Clean Energy Finance (BNEF) has described the company’s thin film technologies as being "unproven in large-scale commercial production."

The FT previously examined HTF in an effort to explain its soaring share price but found nothing to explain its soaring stock, noting that it relies heavily on sales to its parent group.

Analysts who examined the FT’s findings suggested three possibilities: market manipulation by an unknown trader, an algorithmic trading program or random occurrence. However, market watchers noted that a free float of only 27% makes HFT a thinly traded stock with few institutional investors, meaning that it would be difficult to design an algorithm that would consistently make money. Likewise, they found the unusual late-day pattern unlikely to be random.

In a statement to the Hong Kong Stock Exchange this month, parent group Hanergy said it was not responsible for the soaring price of HTF stock: "Our group, as the shareholder of Hanergy Thin Film, has not committed any so-called ‘propping up’ or taken any action to push up its share price."

In a statement to the FT, Hanergy said it was "not aware of any reasons for these prices and volume movements," adding that it had not received any queries from Hong Kong financial regulators. It declined to comment on the findings, saying it did not have FT’s data at hand. The Hong Kong Securities and Futures Commission likewise declined to comment on the findings, the FT reported.

BNEF also put the company under the microscope earlier this month, observing that its technology was unproven and details about its projects scant. BNEF said it was "unable to find a detailed list of solar power projects that would help explain why the company’s shares have risen fivefold in the past year."

In the past few years, Hanergy has acquired a slew of thin-film companies, including Arizona-based Global Solar, Solibro in Germany and MiaSolé in California.