The 99 per cent drop in the stock of China Tianrui Group Cement Co last week triggered a margin call for a major shareholder and wiped out nearly all of its market value. About 4.53 per cent of the company's stock was "forcibly sold in the open market due to the unusual price drop" on 9 April, the company said in a filing.  The 133.1m shares were held in the margin accounts of controlling shareholder Yu Kuo Co, which is indirectly owned by non-executive director Li Liufa and his spouse, reports Bloomberg.

The forced sale would account for almost half of the transactions on the day when Tianrui’s stock plunged 99 per cent to about HKD0.05, according to Bloomberg-compiled data. A third of the company’s free float changed hands on 9 April, with more than 80m traded during the final few minutes of the session. It is unclear what triggered the initial decline, forcing the margin call.

China Tianrui Group Cement said in the statement that its business operations continue to be normal. However, share trading will remain halted while the board seeks to clarify more information, including confirmation from Yu Kuo on whether there was an execution of another 10m shares of margin calls.

Yu Kuo is “seeking legal advice as to whether the forced sale was in compliance with all applicable laws as well as the terms of the relevant contracts,” according to the statement. “Yu Kuo will take further action as appropriate and necessary.”