Shares in a Chinese dairy company plunged 85% in just minutes

Hong KongFlickr / Loïc LagardeHong Kong, where the shares trade.

LONDON — Shares of China Huishan Dairy Holdings collapsed 85% in Hong Kong before the company halted trading on Friday, wiping out about $US4.1 billion (£3.2 billion) in market value.

Shares were down as much as 91% before recovering slightly to HK$0.42 before the lunch time trading break, with more than 779 million shares changing hands.

China Huishan Dairy shares had closed at HK$2.80 the day before.

The firm has taken two knocks in recent weeks. Bloomberg News reported that the company’s chairman, Yang Kai, denied speculation that a shareholder “misappropriated” $US435 million (£347.8 million) to invest in real estate.

In December, US short seller Carson Block also said the company had loaded up on too much debt, causing the business to become unsustainable.

China Huishan Dairy said the allegations were “groundless” and that the report, issued by Block’s hedge fund called Muddy Waters, contained “various misrepresentations, malicious and false allegations and obvious factual errors of the Group,” according to the Financial Times.

Here’s the stock chart:

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