Liquor-Maker Denies Manipulating Shares Amid Mass Selloff

What’s new: A listed Chinese liquor-maker has denied illegally manipulating its share price amid online allegations by a well-known fund manager and a mass selloff that sent the value of its equities so low it triggered a stock exchange circuit-breaker.

Shede Spirits Co. Ltd. (600702.SH), a firewater distiller based in Southwest China’s Sichuan province, said Friday in a filing (link in Chinese) to the Shanghai Stock Exchange that “no circumstances of share price manipulation exist at the company.”

The background: Shede’s share price has soared since the company was bought earlier this year by Chinese conglomerate Fosun International Ltd.

Between March 10 and June 7, Shede’s stocks leapt by more than 330%, with the company also posting several one-day rises of more than 15%. The Shanghai Composite Index gained around 6% over the same period.

But the firm’s equities have plummeted by 20% on every full trading day since Tuesday, the maximum daily fall permitted by the Shanghai bourse.

On Wednesday, Dong Baozhen, a fund manager at a private equity firm specializing in liquor firms, wrote on the Weibo social media platform that the rapid rise in Shede’s share price may indicate illicit tampering and called on the country’s securities regulator to investigate.

A spokesperson for Shede told Caixin no complaint to the regulator had been filed and Dong’s claims had no factual basis.

Last summer, Shede revealed that funds belonging to its listed company had been embezzled by indirect controlling shareholders.

The company’s share price was up 4.39% at 203.77 yuan ($31.88) as of 3 p.m. on Friday.

Contact reporter Matthew Walsh (matthewwalsh@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)

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