Multiple reports have been received alleging that battery manufacturer Leoch International (0842.HK) is involved in suspected market manipulation, insider trading, and fraud. Investors have stated they have filed reports with Hong Kong's Securities and Futures Commission (SFC) and plan to initiate a collective civil lawsuit using a "shareholder representative" mechanism.
Since the beginning of 2026, Leoch International's share price has experienced significant volatility.
Late last year, the company announced plans to spin off its overseas business subsidiary, Leoch Energy, for a listing in the United States. The spin-off was to be executed via a distribution in specie, meaning no cash settlement was involved. Shareholders holding Leoch International shares before the ex-entitlement date would receive an allocation of shares in the overseas company, while those acquiring shares after that date would not. The ex-entitlement date was set for January 9 of this year.
On January 9, Leoch International's share price underwent a major adjustment, closing the day down 62.65%. Main force capital saw a net outflow of HKD 2.6745 million, with a turnover of HKD 13.42 million.
On April 1, after market close, the company disclosed that the spin-off plan had been aborted. During an earnings briefing, the company attributed the cancellation to tightening regulatory scrutiny in the US.
On April 2, the company's share price rebounded sharply, surging as much as 107% intraday.
Investors allege that Leoch International's major shareholders intentionally announced the spin-off to create negative sentiment. After the ex-entitlement date passed and the share price collapsed, they allegedly accumulated shares at low levels, effectively harvesting retail investors. The subsequent announcement of the plan's failure, which led to a sharp price recovery and the return of the assets to the parent company, is seen as a手法涉嫌 market manipulation and fraud.
Retail investors argue that the ex-entitlement process is irreversible. Once it occurs, the share price typically remains depressed. The company's decision to terminate the plan at that stage is viewed as using regulatory rules to legally "expropriate" shares from retail investors.
However, according to the company's earlier announcements, it did not guarantee the successful completion of the spin-off plan.
Sources indicate that Leoch International's overseas business company had already relocated to Singapore, and some senior executives may have already cashed out and transferred assets there.
Data shows that before the spin-off on January 8, 2026, major broker holdings included BOC International and Morgan Stanley, with stable trading and an average daily turnover of around HKD 5 million. Between January and March, before the spin-off was shelved, some brokers slightly reduced their positions amid sluggish trading, with average daily turnover falling below HKD 1 million. After the spin-off was shelved on April 2, CCASS data indicated that major broker holdings included UBS and HSBC.
Investors are now calling on the Hong Kong SFC to monitor the trading records of major shareholders, their relatives, senior executives, and key suppliers to determine if there was significant accumulation of shares between January and March. They also want checks for a cluster of large accounts with identical addresses or opened with the same broker.
Additionally, there are calls for a review of the "real reasons" behind the termination of the spin-off and the motivation for setting the ex-entitlement date.
On the regulatory front, there have been no investigation announcements, inquiry letters, or penalty decisions issued by the SFC or HKEX regarding market manipulation allegations against Leoch International. There are also no public records of related judicial proceedings or case filings.
The Hong Kong SFC has a mature monitoring system for manipulative practices like buying low and selling high. The Hong Kong market operates an investor identification code system, making accounts of major shareholders and related parties traceable. If major shareholders were to "sweep up" shares during the post-ex-entitlement price crash and bought before the termination announcement, such trades would likely be flagged as abnormal.
Therefore, the timing of major shareholders' purchases and changes in their shareholding比例 relative to the timeline of inside information would be key evidence.
Regarding trading characteristics, some views suggest the case may not meet the core criteria for market manipulation. Regulatory scrutiny of stock price volatility primarily focuses on the completeness of information disclosure and the compliance of trading behavior. Leoch International had previously fully disclosed the spin-off proposal, its progress, and the ex-entitlement rules, meeting HKEX requirements.
Its trading patterns are also argued not to align with the core elements of market manipulation. The sharp drop on January 9 corresponded with the ex-entitlement date, and the magnitude of the decline was consistent with the logic of a valuation adjustment for such a distribution. The rebound on April 2 followed the announcement that the spin-off plan was shelved, and the price reaction was highly consistent with changing market expectations. Both volatility events lacked supporting data showing abnormal trading, with the trading behavior conforming to normal market logic in Hong Kong.
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