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Fallen giant faces delisting
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Yang Yunfei
SHANGHAI Narcissus might become the first firm to be given the boot from China's decade-old stock market after the Shanghai stock exchange turned down a grace-period application from the heavily loss-making home appliance maker on Friday.
The Shanghai-listed company, labelled particular transfer (PT) after racking up losses for three consecutive years, submitted an application to the stock exchange for a six-month period to haul its account books back into the black on Wednesday after it posted a net loss of 211 million yuan (US$25.5 million) for the year 2000 under international accounting standards, its fourth year in the red.
But the stock exchange decided not to grant Narcissus the grace period after careful reviews and inquiries, it said in a statement published in domestic securities newspapers on Saturday.
The exchange added it would notify the China Securities Regulatory Commission (CSRC), the market watchdog, which will decide what will happen to the chronic money-loser.
According to applicable rules, the CSRC can delist a firm should the grace-period application be denied by a stock exchange.
Narcissus, which has also listed US dollar-denominated B shares available to foreign investors, is under trading curbs, with its shares traded only on Fridays and capped at five per cent price rises but no downward limit.
Both Shenzhen and Shanghai bourses warned six PT firms on April 10 that they will terminate PT trading of their shares if no grace-period is approved following the announcements of their annual results.
In its heyday, Narcissus was China's second-largest washing machine maker with 13 per cent of the domestic market share. These days, however, the company is on the ropes after battling stiff competition from aggressive rivals Haier Group and Wuxi Little Swan, which are able to adapt to changing market demand far better than the one-time titan.
China has intensified its campaign this year to clean up its unruly markets, which are rife with poor-quality firms, speculation and market rigging.
Market regulators have vowed to kick out ailing firms to help improve the performance of the country's listed firms.
According to China's nascent Securities Law, regulators can delist a firm that stays in the red for three years in a row. But they have never yet taken that drastic step, partly because the guidelines allowing them to do so were murky until recently.
A concrete spelling-out of delisting rules in February stated that firms posting three or more years of losses could be delisted if they fail to turn around within a grace period of six months to a year.
But the grace period is conditional on such companies submitting a feasible restructuring plan.
Four other Shanghai-listed firms had their shares suspended on Friday after posting four years of losses.
Officials have said that China will carry out its first-ever delisting before June.
In a move that appeared to be aimed at easing investor panic, a CSRC spokesman said on Saturday that shareholders of a delisted firm can sell their shares through stock brokerage houses sanctioned by the CSRC for such purposes.
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