(Yicai Global) Nov. 9 -- Zhonghong Holding Group, a debt-laden real estate developer, has become the first company forcibly delisted from China's mainland stock market after its shares languished below their face value of CNY1 (14 US cents) for 20 straight trading days.

The Anhui-based company had posted major risks such as large losses, several defaults, and suspensions of main projects this year, according to a statement from the Shenzhen Stock Exchange. Investors voted with their feet, the statement added., 

The shares [SHE:000979] ended trading below face value for the first time on Aug. 15. They dropped under that level again on Sept. 13 and remained there until Oct. 18, putting Zhonghong in the firing line. The exchange initiated the delisting process on Oct. 19 and suspended trading in the stock prior to a final decision 15 days later.

Zhonghong will now enter a 30-day delisting preparation period on Nov. 16 and the stock's short name change to Zhonghongtui, which in English means 'Zhongtong delisted.' The stock will remain subject to 10 percent daily trading limits and the exchange cautioned investors about the risks involved in trading in the firm's equity during this period.

Shareholders have suffered a direct impact. Zhonghong was popular among retail investors with quarterly shareholder numbers of more than 170,000. The company had 274,500 common stock shareholders as of Sept. 30, a record high since it listed.

Institutional investors owned almost 53 percent of the company's stock, or 4.4 billion shares, at the end of September. Brokerages accounted for 13.7 percent and funds, 0.7 percent, according to data from financial platform Wind.

China Merchant Wealth, Guodu Securities, Zhongtai Securities, Agricultural Bank of China and several other financial institutions counted among the company's top 10 investors. CMW was hit hardest due to an almost 12 percent stake through two asset management plans.

Editor: William Clegg