HONG KONG: Hong Kong Exchanges & Clearing will halt listings by introduction unless issuers can show they have taken steps to ensure ample liquidity and an orderly market, bourse spokesman Henry Law said by telephone yesterday.

The new practice follows an opening-day surge and plunge in shares of Asian Citrus Holdings, China's biggest orange plantation owner, that prompted investors to criticize disclosure rules.

More than 300 people in Hong Kong filed complaints after the Asian Citrus listing, prompting the city's legislature to summon regulatory officials for a special hearing on Monday.

"The problem with Asian Citrus was that they were comparing apples with oranges," said David Webb, a Hong Kong-based shareholder activist.

He said Asian Citrus shares were suspended from trading less than two hours following their debut after he told the exchange that data on the bourse's computers didn't reflect a 10-for-1 split in the London-traded stock.

Asian Citrus opened more than eight times higher than its London-traded stock before slumping on its November 26 debut after Hong Kong's exchange published data that may have led investors to overvalue the shares. Shares listed by introduction are brought to Hong Kong from another market instead of being initially sold in the city.

More than 300 "victims" are awaiting the outcome of an investigation by Hong Kong's Securities and Futures Commission into Asian Citrus's debut, lawmaker Tanya Chan said.

Keith Lui, an executive director at the regulator, declined to say at the hearing when the probe will be completed.

Asian Citrus opened at HK$51.25 ($6.61) in Hong Kong on November 26, compared with the November 25 close of 45.75 pence (73 cents) for London-traded shares. The Hong Kong shares were suspended at HK$19.94. They closed yesterday HK$6.58.

Asian Citrus's net tangible asset value per share was 37.3 yuan ($5.46) on June 30, according to its listing prospectus. By displaying this figure without noting the split in the company's stock in November, Hong Kong exchange's computers may have led investors to "think that their investment is backed by 10 times more assets than it really is", Webb said last month.

Bloomberg News

(HK Edition 12/23/2009 page4)