Third Chinese Company in a Week Has Accidental 'Fat Finger' Share Sale

Another Chinese company said a major holder accidentally sold its shares, increasing speculation that insiders may be testing the market before they offload their stakes.

Shenzhen Changfang Group Co. said Nie Xianghong, a shareholder acting in accord with top investor Li Dichu, accidentally sold 16,000 shares on Friday by inputting the wrong ticker. The stock, which rose by the 20% limit for a fourth day on Monday, has more than doubled in price this month. Li owned more than 11% of the company before the sale.

On Thursday, Sany Heavy Industry Co. said its board would fine stakeholder Mao Zhongwu after an unspecified “trading error” led to him offloading 96,700 more shares than he had intended to. Days earlier, the chairman of display maker TCL Technology Group Corp. said a trader accidentally sold 5 million company shares using his account. At least three other companies, including Liqun Commercial Group Co., have disclosed and apologized since late August for executives selling shares by mistake.

The sudden wave of erroneous trades is putting the spotlight on insider dealings at China’s listed companies. Selling by major shareholders is often taken as a negative signal in China -- suggesting executives are losing confidence in a firm’s prospects -- and can lead to stock declines once they are disclosed.

Third Chinese Company in a Week Has Accidental 'Fat Finger' Share Sale

“The way I picture this happened was that these executives wanted to test whether it was possible to sell their shares in the open market,” said Lv Changshun, an analyst at Beijing Zhonghe Yingtai Management Consultant Co. “Call them mistakes, but they were done on purpose. The executives naturally have an urge to take profit.”

Changfang has publicly warned investors of abnormal fluctuations in its shares. The firm, which makes LED lighting products, is among Shenzhen’s best stocks for September despite saying it suffered a net loss of 33.8 million yuan ($4.95 million) in the first half of 2020. The Shenzhen Stock Exchange said Friday it is monitoring the shares due to the significant gains.

©2020 Bloomberg L.P.

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