Beingmate shares suspended on China exchange

A woman stands in front of a screen showing the Hong Kong share index outside a local bank in Hong Kong. Photo / AP

Shares in Beingmate Baby & Child, the Chinese dairy firm in which New Zealand's Fonterra holds an 18.8 per cent stake, have been suspended from trading amid the turmoil plaguing China's stock markets.

At least 1331 firms on the Shanghai and Shenzhen stock exchanges have halted trading - freezing US$2.6 trillion worth of shares, or about 40 per cent of the country's market capitalisation - in order to avoid the volatility, Bloomberg reported.

Beingmate's Shenzhen-listed shares closed down 10 per cent (the maximum daily limit imposed on share price losses) on Tuesday, at 12.11 yuan, but did not trade at all yesterday.

The firm's stock price has now dropped 32 per cent from the 18 yuan per share price Fonterra paid for its investment, which was part of partnership that includes a potentially lucrative distribution agreement for the New Zealand company's Anmum infant formula brand.

The decline has wiped 1.1 billion yuan (NZ$270.8 million) off the value of Fonterra's Beingmate shareholding.

It was a very different story last month.

On June 12 Fonterra was sitting on a NZ$373 million paper gain on its investment after Beingmate shares surged as part of the meteoric rally that saw the Shenzhen exchange gain 186 per cent in 12 months.

The Shenzhen Composite Index has now tumbled 40 per cent since peaking at 3140.663 on June 12.

The crash has wiped more than US$3.5 trillion off the value of Shanghai and Shenzhen-listed stocks.

Tsutomu Yamada, a market analyst at Kabu.com Securities in Tokyo, told Bloomberg that it was "absurd" for firms to stop trading just because they didn't want their share prices to fall.

"They're going all out in trying to stop stocks from falling but it's not working."

A raft of Chinese government-introduced measures have also failed to halt the fall.

Bloomberg reported that investors who were unable to trade shares as a result of trading suspensions where turning elsewhere to raise funds, which fuelled the biggest drop in a month in Chinese government bonds yesterday.

It also helped drive a 5.8 per cent tumble on Hong Kong's Hang Seng Index.