China's Wanda Film Co. Hit by Massive Investor Sell-Off

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Wanda chairman Wang Jianlin

Wanda Group's publicly traded entertainment unit saw its stock dive 10 percent on Thursday.

China's Dalian Wanda Group was at the center of a major investor sell-off Thursday, as investors reacted to political rumors surrounding the company's billionaire chairman Wang Jianlin.

The company's publicly traded entertainment unit, Wanda Film Holding Co., saw its stock crash 10 percent before it was suspended from trading on the Shenzhen Stock Exchange. Wanda Film is the wing of Dalian Wanda Group that contains its film production, marketing and distribution assets, along with China's largest cinema line and the multi-billion-dollar Wanda Studios Qingdao, which is expected to be the world's largest movie-making facility when it fully opens in 2018. 

Bloomberg News says it was the company's biggest stock drop since January 2016. Meanwhile, Wanda Properties International Co.’s 2024 notes, a form of debt securities, or bonds, took a dive of as much as 10.7 cents on the dollar in morning trading in Hong Kong, which Bloomberg reports as the company's biggest loss on record.

The sudden plunge appears to have been spurred by online rumors in China suggesting that China Construction Bank had ordered its staff to divest all Wanda-related bonds. These rumors in turn generated further speculation that Wanda's Wang may have fallen afoul politically. 

Bloomberg quoted Castor Pang, head of research at Core-Pacific Yamaichi HK, as saying: “The most important factor of doing business in China is the company’s political stance. ... Political risks are the factor that is most difficult to evaluate in China. Even it is just a rumor, investors will choose to sell off first.”

Wanda responded to the plunge with a post on its official social media accounts, saying: "Today, someone on the internet viciously speculated that some banks, including China Construction Bank, issued a notice to dump Wanda’s bonds. After investigation, banks such as China Construction Bank have never issued such notices, and speculations online are just rumors."

Shortly after the statement was made, Wanda applied for the trading halt. Wanda's statement added that "all operations are fine, and we sincerely hope that people will not trust or circulate rumors."

More to come...