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Wuzhou International suspends trading as share price tumbles to record low

Shares in Chinese property developer Wuzhou International Holdings Ltd. have been suspended from trading on the Hong Kong stock exchange since the morning of May 25 after they slumped 84.89% to a record low of 6.8 Hong Kong cents.

The trading halt is "pending the release of an announcement relating to the cause of the unusual movements and any inside information of the company," Wuzhou International said in a same-day filing to the Hong Kong bourse.

The dramatic fall in Wuzhou International's share price came on the back of a report by China state-owned newspaper International Finance News which revealed that Wuzhou affiliate Jiangsu Wufeng, a commercial developer, has several uncompleted construction projects in China's Jiangsu province, through which it misappropriated billions of yuan worth of capital from property buyers. According to the May 21 report, Wuzhou International and Jiangsu Wufeng collaborated with each other to cheat investors of their money through commercial projects.

In a May 24 statement on its website, Wuzhou International denied the report's allegations, saying they constitute "malicious libel" and that the company is seeking legal assistance on the matter. The developer, however, confirmed that it does own a 5.13% stake in Jiangsu Wufeng.

Despite the company's denial of the misappropriation claims, its share price still tumbled the following day after it released its official statement.