ISS Shares Dropped 11% as Hong Kong Fire Probe Sparks Liability Fears

ISS A/S shares fell sharply in Copenhagen trading on Tuesday, tumbling as much as 11% amid growing concerns over its involvement in the renovation of a Hong Kong apartment complex where a deadly fire occurred on November 26. The Danish facility services group was reported to have acted as a property manager for the Wang Fuk Court complex, a role that included administrative tasks but not decision-making or contractor selection. The South China Morning Post first reported on the firm's potential exposure, triggering a sharp sell-off in Copenhagen.

The fire at the Wang Fuk Court apartment complex, which killed at least 156 people and left 30 missing, has sparked a public outcry and prompted Hong Kong authorities to launch a judge-led independent inquiry. The investigation will examine the systemic causes behind the disaster, including the oversight of renovation work that officials believe may have contributed to the rapid spread of the blaze. Hong Kong leader John Lee emphasized the need for accountability and transparency in his first weekly briefing since the incident.

ISS has denied involvement in decision-making processes around the renovation project, stating that the tendering process was managed by the building's Incorporated Owners (IOs) through an authorized e-tendering platform. The company emphasized full transparency in the process and expressed support for the independent investigation. It added it would cooperate fully with authorities and provide any information or assistance required.

Market Reaction and Investor Concerns

The sharp drop in ISS shares highlighted growing investor concerns over the potential legal and financial exposure the company might face. Investment economist Per Hansen of Nordnet AB noted that such investigations can be lengthy, costly, and bring significant uncertainty to the firm's operations and financial outlook. He also warned that the stock could become a target for short sellers, which could further pressure the share price in the short term according to market analysis.

Even after Tuesday's decline, ISS shares have risen more than 50% over the past year, reflecting the company's strong performance in most of its operations. However, the Hong Kong incident has introduced a new layer of risk. The company's shares are now trading below their recent peaks, with analysts watching closely to see if the decline signals a broader shift in investor sentiment or a more temporary market reaction.

The Danish firm is not the only company affected by the fire. Shares of China Taiping Insurance Holdings, the insurer covering Wang Fuk Court and the renovation contractor, also fell significantly. The firm's Hong Kong unit is exposed to potential liabilities of over HK$2 billion (US$257 million) for damage to the complex and another HK$365 million for the contractor's "all risks" coverage according to financial reports. Analysts at Citigroup warned that the fire could significantly hurt the underwriting results of Hong Kong's general insurance industry.

Company Statements and Ongoing Investigations

ISS has reiterated its cooperation with authorities and emphasized that its role in the Wang Fuk Court project was purely administrative. The company's property management arm, ISS EastPoint Properties Limited, stated it did not recommend or appoint the contractor for the renovation work and had no direct oversight of the day-to-day project management.

Hong Kong authorities have already taken action, with police arresting 15 people on suspicion of manslaughter over the blaze. The investigation is focusing on whether workers used substandard materials and evaded government testing procedures, which may have accelerated the fire's spread. Authorities have also identified Prestige Construction and Engineering Company as the registered contractor for the building complex according to official reports.

ISS's response has been echoed by other firms involved in the renovation. Prestige Construction has not commented publicly, despite repeated attempts by Reuters to contact the firm. China Taiping Insurance Holdings also declined to provide a comment, according to a Reuters report. A source familiar with the matter confirmed that the Hong Kong unit provided comprehensive coverage for the renovation project, including "all risks" and employee compensation.

The Hong Kong government has pledged to deploy adequate resources to handle claims and inquiries related to the fire, with the Hong Kong Insurance Authority stating its senior management is leading a task force to coordinate with insurers. The government also announced that emergency teams have brought the fire under control in all affected blocks, more than 24 hours after the blaze began according to official statements.

Broader Implications and Public Response

The fire has also sparked political and social reactions, with Hong Kong leader John Lee vowing to crack down on any forces attempting to "sabotage" social unity. The incident has rekindled public anger, reminiscent of the widespread protests seen in the city about six years ago. Online petitions have called for transparency and accountability, with thousands signing in support of an independent investigation.

In a separate but related development, Bitget, a global cryptocurrency exchange, announced a relief fund of $12 million HKD ($1.54 million USD) to support families affected by the fire. The funds were allocated to three Hong Kong-based charities to ensure structured and transparent distribution of aid, including medical support, temporary housing, and psychological counseling according to the company's announcement.

The tragedy has also drawn attention to Hong Kong's broader housing crisis, with Wang Fuk Court housing over 4,600 people across 2,000 apartments in a city grappling with a severe shortage of affordable housing. As the investigation continues, all eyes will be on the judge-led committee to determine whether systemic failures played a role in the disaster according to official reports.