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China Hongqiao seeks Hong Kong court order to stop negative research reports
November 6, 2017 / 5:36 AM / a month ago

China Hongqiao seeks Hong Kong court order to stop negative research reports

BEIJING, Nov 6 (Reuters) - China Hongqiao Group, the world’s largest aluminium producer, is seeking a court order to restrict previously published research reports by a group of analysts that alleged accounting irregularities at the company.

China Hongqiao in March halted trading of its shares, which only resumed on Oct. 30, after a report released in February by a group called Emerson Analytics asserted that Hongqiao was understating its costs and exaggerating its profits.

On Nov. 3, Hongqiao applied to the High Court of Hong Kong for an injunction to “restrain the publication” of the February report, an Oct. 30 report Emerson published as trading resumed and “further defamatory reports,” according to a statement to the Stock Exchange of Hong Kong on Sunday.

An injunction is a court order that forbids actions or orders an action to be taken.

A hearing on the matter is set for Nov. 27, Hongqiao said. A High Court spokesman was unable to confirm the case or the date without a case number, which was not provided in the stock exchange statement.

Hongqiao told the exchange on Oct. 30 that it had filed a defamation lawsuit in Hong Kong against Emerson.

After the February report from Emerson, Hongqiao called the allegations “untrue and groundless” but, with its share price tanking, the company asked to suspended trading.

As trading resumed, Emerson Analytics issued a new report alleging inconsistencies in Hongqiao’s clarification statement on Oct. 25.

Hongqiao’s shares have surged more than 30 percent since trading restarted, belatedly tracking a rally in aluminium prices in recent months. The stock was down 0.8 percent at HK$12.40 ($1.59) by 0517 GMT on Monday.

Emerson Analytics did not immediately respond to emailed requests for comment. The company describes itself on its website as a group of “seasoned equities analysts” who are “determined to expose as much of the fraud in the Chinese stock market as we can.”

Other Emerson reports have targeted Tian Ge Interactive Holdings, a social video platform in China, and Hua Han Health Industry Holdings, a pharmaceutical firm. ($1 = 7.8023 Hong Kong dollars) (Reporting by Tom Daly; Editing by Christian Schmollinger)

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