Angry shareholders stormed a public meeting on Monday for beleaguered LeShi Technology, as the company tried to address its financial problems. The day also saw trouble for companies in the orbit of Dalian Wanda. And the shares of some 500 listed companies dropped by their 10% maximum daily trading limit.
Traders said that Chinese markets were spooked by tightening regulatory control over the financial sector and by pieces of individual company news. The benchmark Shanghai composite index dropped 1.4% to 3,176 on Monday. Other indexes fared worse: The ChiNext Index dropped 5.1% to 1,656, and the Shenzhen Composite Index dropped 4.3% to 1,800.
Early trading Tuesday saw indexes holding steady or make modest gains.
LeShi, the Shenzhen-listed company which includes the LeVision video streaming business, said that Sun Hongbin, Liang Jun and Zhang Zhao had been appointed as company directors. The new board members take over following the enforced departure of Jia Yueting, LeEco’s founder and still one of the group’s largest shareholders. Last Friday, the company revealed an estimated $87 million (RMB600 million) of losses for six months.
Security staff and bodyguards were reported to have prevented a crowd from storming the meeting in Beijing. And there were protests from some inside the meeting room who called for LeShi to repay monies owed. The meeting lasted only 10 minutes and failed to appoint a new chairman for the company, though Sun is expected to be appointed later, according to Chinese media reports.
Sun, who heads the Sunac China property group, has committed $2.17 billion (RMB15 billion) to shoring up LeEco, which had attempted to build an ecosystem that stretched from movie-making in Hollywood and China to smart TV sets and electric cars. Sun is the same businessman who was revealed last week as the buyer of $9 billion in theme parks and hotels from Wanda.
Reports on Monday that the Chinese government had halted bank lending to Dalian Wanda had an indirect impact on share prices since Dalian Wanda is not a listed company, shares in its Wanda Film Holdings are currently suspended pending a reorganization, and LeShi shares have been suspended since April pending the refinancing. In the U.S., shares in the Wanda-controlled AMC Entertainment cinema chain were down 10% on the New York Stock Exchange on Monday, closing at $19.70.
The apparent government intervention at Wanda came on the same day that the China Banking Regulatory Commission issued a statement announcing “planned and step-by-step efforts to tighten the regulation of inter-bank investment and financing, leveraging and off-balance-sheet business.”
The commission’s statement followed a two-day meeting of China’s National Financial Work Conference, a conference held once every five years to set national policy. Its latest focus is on diminishing systemic risk in China’s financial system.
The tightening moves and the Wanda news overshadowed publication of new data that showed China’s economy accelerating for the first time in five years. GDP growth was reported Monday as hitting 6.9%