A Closer Look at the Catastrophic 99% Stock Crash in 15 Minutes

16 Apr

In a heart-stopping financial spectacle, China Tianrui Group Cement Co., (TT18) a once-prominent Chinese cement producer, experienced a dizzying descent on the trading floor, with its market value plummeting by a staggering 99% within a mere 15 minutes. The sudden free fall, akin to a financial earthquake, left investors reeling and analysts scrambling for explanations.

The Dramatic Dive:
The alarming nosedive commenced during the final moments of the trading session, as if scripted for a suspense thriller. In a frantic frenzy, shares of Tianrui tumbled to an astonishing HK$0.05, stripping away nearly the entirety of its market capitalization, which dwindled to a mere HK$141 million ($18 million).

Roots of the Disaster:
Unraveling the enigma behind this catastrophic collapse unveils a tangled web of financial intricacies and systemic vulnerabilities. Tianrui's woes are emblematic of the perils lurking within certain segments of China's corporate landscape, particularly among lesser-known entities burdened by opaque ownership structures and precarious financing strategies.

High Stakes and Hidden Risks:
Central to Tianrui's unraveling is its reliance on a concentrated ownership model, with its controlling shareholder, Li Liufa, and his spouse commanding a substantial 70% stake in the company. Such lopsided ownership, compounded by the practice of pledging shares as collateral for loans, exposed Tianrui to the treacherous waters of margin calls and investor panic.

Navigating Turbulent Waters:
Against the backdrop of China's escalating property crisis, Tianrui found itself caught in a perfect storm of adverse market conditions. The company's staggering transition from profitability to a net loss of 634 million yuan ($87.7 million) underscores the harsh realities of weakened demand, cutthroat competition, and soaring raw material costs plaguing the cement industry.

Lessons Learned and Future Outlook:
The harrowing saga of Tianrui serves as a poignant reminder of the inherent risks lurking within the shadowy corridors of China's corporate landscape. As investors grapple with the aftermath of this seismic event, regulators and market participants alike are compelled to scrutinize corporate governance practices and fortify safeguards against future financial meltdowns.


Technical Outlook
China's Tianrui Group Cement Co., (TT18) stock lies far below the obersold territory with a Relative Strength Index (RSI) of 0.19 indicating strong selling pressure from the bears. The stock is trading far below the 200, 100 and 50-Day Moving Averages (MA) respectively.