The extent and speed of the collapse of Hanergy Thin Films stock price surprised some observers of the Hong Kong Stock Exchange. However, serious questions regarding the companys towering market capitalization previous to the collapse had been be raised by some analysts and journalists for months and even years leading up to the tumultuous day, May 20.
Hanergy founder and chairman Li Hejun has now come out in blaming short sellers for the fall by more than 50% of the share price, according to a transcript published by the Hong Kong based company. Around US$18.6 billion was wiped off the companys stock price in one day of trading.
The only big winner is short-sellers," said Li at the Hanergy anniversary event, in reporting from AP. "While I have enormous direct losses, the losses for shareholders, investors, institutions and employees make me even more sad and upset."
Lis comments come at a time in which a number of Chinese companies have pointed the finger at short sellers after big falls in share prices on the Hong Kong Stock Exchange. Trading in Hanergy remains suspended by the Hong Kong Securities and Futures Commission (SFC) as the body carries out an investigation into Hanergy Thin Film lending, trading and sales practices.
Questions regarding the companys value arose once it became clear that the vast majority of Hanergy Thin Films PV equipment sales were to parent company Hanergy. Li has explained away these concerns as being a historic legacy of the two companies structures.
It could well be the case that Hanergy Thin Film fell victim to short selling. Charles Yonts, the Head of Sustainable Research at CLSA, produced a number of notes questioning Hanergy Thin Films value and highlighting the practice of selling to its parent. Yonts said that after the publication of his 2014 Hanergy note entitled ‘Are They Really That Good?’ there was interest in his research from funds looking to short Hanergy.
The entities that were most interested [in the report] were the hedge funds that had looked at Hanergy as a possible short candidate, Yonts told pv magazine. These funds either had short positions or were thinking about them.
It does seem likely that a number of investors and funds took short positions in Hanergy Thin Film as an increasing number of analysts and news outlets began to questions the companys fundamentals. Bloomberg New Energy Finances Jenny Chase followed Yonts lead and begun to question the companys value and the number of newspapers investigating Hanergy increased rapidly, on the back of excellent reporting from the Financial Times.