(Yicai Global) Nov. 21 -- The curious case of Poten Environment shows how the Chinese stock pledging crisis touches the country's regulators, firms, stock markets, and investors, while the end result may transport them all back to square one.

Poten, an environmental service provider, was saved by a bailout fund which was set up after the government urged financial institutions to help firms that have pledged their stocks as collateral for loans. 

Three corporate shareholders of the A-share listed company started to look for a way out and submitted a plan on Nov. 19 to reduce their stakes with a value of over CNY2 billion (USD288 million), which equaled 31 percent of the outstanding shares. Investors reacted by a sell-off and the stock price [SHA: 603603] dropped the daily limit of 10 percent to CNY16.29 (USD2.35) the next day.

The Beijing-based company received an inquiry letter from the Shanghai Stock Exchange yesterday, which forced the three shareholders to withdraw their plan and withhold from such radical ideas for the next six months.

The stock, however, continued its decline to close at CNY15.45 today with the decrease of 5.16 percent from this morning. The highest peak for the share so far this year has been CNY37.24 on Jan. 3.

But before the situation got too dire, fresh opportunities to borrow money appeared. The Industrial and Commercial Bank of China and other financial institutions have rushed for help and lend money to the firm. The Beijing branch of Bank of Jiangsu penned a loan agreement worth CNY100 million (USD14.4 million), which has stopped the sharp downward slide of the stock price in the short-term.

Editor: Emmi Laine