Zhejiang Hangxiao Steel Structure Co. was fined by China's securities regulator for failing to disclose contracts worth more than 10 times the company's market value that sent the stock price soaring to a record. [newsphoto]

The China Securities Regulatory Commission fined Hangxiao 400,000 yuan ($52,000), Chairman Shan Yinmu and President Zhou Jinfa 200,000 yuan each, and three further officials 100,000 each, the company said in a Shanghai Stock Exchange statement.

The penalties underscore the government's attempts to crack down on abuses in a stock market that almost tripled in value in the past year, prompting warnings of a possible bubble by officials including central bank head Zhou Xiaochuan. Small and even money-losing companies have outperformed the benchmark index this year on speculative buying.

Related readings:  Heavy fines needed to regulate market Hangxiao Steel fined for disclosure breach  Hangxiao Steel to be punished Hangxiao Steel Structure probed for illegal disclosure

Hangxiao Steel said on March 13 that it won 34.4 billion yuan of orders from Angola, five times China's entire exports to the African nation last year. The company's shares surged by the 10 percent daily limit today after the regulator stopped short of questioning whether the contracts are genuine.

The statement "spurred speculation on the stock again," said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai.

Shares of the building materials maker, based in the eastern city of Hangzhou, rose 1.35 yuan to 14.88 yuan at the 11:30 a.m. trading break. The stock has risen more than fourfold this year, giving the company a market capitalization of 3.7 billion yuan.

Misleading Comments

Hangxiao Steel failed to disclose the orders from Angola in newspapers or tell investors about the transaction in due time, the statement said, citing the regulator. Comments by company officials relating to the probe were misleading, it said.

Company director Pan Jinshui told media on April 5 that the regulator's investigation was "basically over" and the company didn't violate disclosure rules, the statement said.

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