china-minzhong-logoShares of vegetable seller China Minzhong Food Corp crashed to just half their value yesterday morning after a United States short seller accused the firm of falsifying sales and other figures.

The highly damaging claims by California-based Glaucus Research Group – which says China Minzhong has zero value – are somewhat similar to an attack on Olam International by Muddy Waters last November. Short sellers hope to make profits by trading shares that they believe will fall in value.

China Minzhong’s share price plummeted from Friday’s close of $1.015 to as low as 50 cents – a 51 per cent slump. The shares are at their lowest level since June last year.


GIC – formerly known as the Government of Singapore Investment Corp used to hold a 14.38 per cent stake in the firm, which it sold in March to Indonesia’s PT Indofood Sukses Makmur – the No. 1 shareholder at 29.33 per cent.

After last year’s Olam saga, SGX introduced new rules requiring traders to declare if their share sales are “short”. Even so, it seems that there was no sign before the storm.  “It is not clear when Glaucus accumulated its China Minzhong position. SGX data shows total short sales in the firm were only $21.6 million over the past nine weeks… and there were no dramatic spikes in its total volumes traded over the past few weeks.”

This is a typical case to show just how hard to try to make money out of a single stock. Click the link below for more information.

Update: Aug 29, 2013 – China Minzhong response to Glaucus report and Extension of Trading Halt.

Update: Sep 2, 2013-  Trading Halt again, Possible Offer by PT Indofood Sukses Makmur Tbk (“PT Indofood”)

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
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