BEIJING— Shares of Zoomlion Heavy Industry Science and Technology Co Ltd surged on Monday after a newspaper admitted it had not thoroughly fact-checked disparaging reports on the Chinese state-owned construction equipment maker.
The apology from Guangzhou-based New Express came after its detained reporter, Chen Yongzhou, confessed to accepting payment in exchange for disparaging Zoomlion.
Zoomlion has been the subject of a string of Chinese media reports this year, including those from New Express, that have accused the company of fictitious sales and helped its Hong Kong-listed shares tumble nearly 40 percent for the year to date. It has vigorously denied the reports.
The controversy over Zoomlion also comes at a time of fierce rivalry with hometown competitor Sany Heavy Industry Co Ltd that has escalated into ugly public rows.
Zoomlion said in a July stock filing that it had been under an “all-round malicious attack by its competitor” since the fourth quarter of 2012 and has denied accusations by Sany of spying and attempting to kidnap the son of Sany's chairman.
Tensions between the country's media and its listed firms have also been increasingly troubled in recent years, with both sides seeing their integrity questioned by the other.
New Express had earlier made a front page plea for Chen's release - an unusual public rebuke amid a wider government crackdown on freedom of expression.
However, it admitted on Sunday that its monitoring of the manuscript had not been strict. “The incident has seriously damaged the credibility of the media,” it said.
On Monday, Zoomlion's Hong Kong and Shenzhen-listed shares were trading about 7 percent higher compared with largely flat markets.
Zoomlion bonds were steady after their recent rally, with some private banking clients looking to take profits on the news. Bonds due in 2017 were quoted wide at 102/104 and those due in 2022 were at 93/95. Neither of them are very liquid.
Traders said the bonds had already rallied from their June lows of 96 and 81 due to the lack of any follow up attacks following the last media report that had made allegations about false sales.
As long as there is no further negative news, debt investors will continue to get coupon for the time that they hold the bonds with the possibility of capital gains as well, industry insiders say.