Hongqiao Request Injunction Against “Defamatory” Reports from Emerson
07 November 2017 by Staff
The world’s largest aluminium firm has gone to court in Hong Kong to enjoin a group of short sellers from publishing reports accusing it of accounting irregularities.
Last Friday China Hongqiao Group approached the High Court of Hong Kong requesting an injunction against short seller Emerson Analytics to prevent it from publishing a February report, a report issued on October 30, and any “further defamatory reports” the short sellers may seek to publish, according to a notice filed with the Stock Exchange of Hong Kong over the weekend.
According to Honqiao, the court has scheduled a hearing on the matter for November 27. The injunction follows a lawsuit filed on October 30 against Emerson, accusing the group of defamation.
Emerson has been a thorn in Hongqiao’s side for the better part of this year. In February the group issued a report accusing Hongqiao of significantly understating its costs and exaggerating its profits. Despite immediate and strenuous denials, Hongqiao’s shares fell dramatically in the hours after the report’s release, prompting Hongqiao to request a suspension in trading in order to halt further losses.
Since the report’s release the firm has faced difficulty in publishing financial results for the 2016 fiscal year, which soon became a requirement by the Hong Kong Stock Exchange for the firm to be allowed to resume trading.
Hongqiao’s stock resumed trading on October 30. Emerson released another scathing report the same day that challenged statements made by Hongqiao five days prior in an attempt at clarifying the ongoing controversy.
Hongqiao’s stock has risen by over 30 percent in the days since trading resumed, likely thanks to the ongoing recovery in the aluminium market. Some experts contend that the recovery was also boosted by Chairman Zhang Shiping’s purchase of over 18 million Hongqiao stocks the day after trading resumed.
For its part, Hongqiao has consistently and vociferously denied Emerson’s accusations, characterizing the allegations as “untrue and groundless.”