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HONG KONG—On the day Li Hejun lost roughly $14 billion, he was skipping his company’s annual meeting to attend what it said was a clean-energy exhibition in Beijing.


Hanergy Thin Film Power Group Ltd


Goldin Financial Holdings Ltd


Hang Seng Bank Ltd





That company, Hanergy Thin Film Power Group Ltd., which Mr. Li controls, saw its shares plunge nearly 50% on Wednesday before trading was halted. Mr. Li, who at one time was considered China’s richest man based on the value of his majority stake in the Chinese solar company, saw his holdings suffer accordingly.

The Wednesday decline was followed on Thursday by a similarly steep fall in Goldin Financial, a broker that provides short-term corporate financing to firms and had been an advisor to Hanergy Thin Film. Goldin fell 43%, wiping $12 billion off its market value. A smaller company with the same owner, property developer Goldin Properties, fell by 41%, reducing its market capitalization by $4.6 billion.

The pain from these violent falls is stinging investors, especially those in exchange-traded funds focused on China’s energy sector.

© Associated Press

For mainland Chinese investors, it has been particularly painful: Credit Suisse estimates that money from the mainland into Hong Kong has surged in recent months to reach $748 billion in April. Hong Kong’s Hang Seng Index has gained 17% year to date, trailing a 37% gain in the Shanghai Composite Index.

All three companies had made meteoric rises over the past year with industry watchers troubled by their sudden rallies.

“These companies are bubbles,” said David Webb, a Hong Kong corporate-governance activist. “They still have a long way to fall before they can reflect their fundamental values.”

China’s Hanergy Holding Co. has denied that it was behind Wednesday’s sharp selloff in its Hong Kong-listed subsidiary and said it was operating normally. Beijing-based Hanergy Holding, which controls Chinese solar-panel producer Hanergy Thin Film, said in a statement Thursday that the company was financially healthy.

“Our group currently operating normally, all the business operations are running well and the capital situation is fine,” Hanergy Holding said.

Before Wednesday’s plunge, solar-panel producer Hanergy Thin Film’s shares had seen a meteoric rise, making the stock one of the Hong Kong market’s best performers. Even after the slump, Hanergy’s shares as of Wednesday’s halt were up more than 42% since the beginning of the year and are more than triple their level of one year ago.

Analysts have widely said the shares were overvalued.

Hanergy previously had a lower profile. Until the recent run-up, it traded mostly below two Hong Kong dollars a share and was viewed as a relatively minor appendage of Hanergy Holding Group Ltd., a large Beijing-based renewable energy company that became the unit’s majority shareholder in 2013.

The company’s major product is known as solar thin-film technology, which features thin, flexible panels that could be attached to walls or gadgets or even worn on clothing. Thin-film panels are cheaper to produce but less efficient in converting sunlight to energy. As a result, they make up less than 10% of the overall market, which is dominated by solar panels based on crystalline silicon.

Filings with the Hong Kong exchange show Hanergy and Goldin Financial have previously worked together, although it was unclear whether the relationship contributed to Goldin’s fall. Hanergy said in a February disclosure it had appointed Goldin as an independent adviser for a supply agreement under which Hong Kong-listed Hanergy Thin Film would sell solar panels to its parent company.

The Securities and Futures Commission, Hong Kong’s market regulator, warned investors to exercise “extreme caution” with Goldin Financial in March, noting that just 20 shareholders—including its chairman who owns a 70% stake—held nearly 99% of the company. The company said at the time that there was little it could do because the SFC didn’t disclose who those shareholders were.

Both Goldin Financial and Goldin Properties issued filings Thursday to the Hong Kong market saying they are not “aware of any reasons” for the movement of the stocks. The companies didn’t respond to requests for comment.

Mr. Li of Hanergy, 47 years old and a member of China’s Hakka ethnic group, was born in China’s southern Guangdong province. He initially began building and acquiring small dams in his home region, according to a biography on Hanergy’s website. Later the company built the Jinanqiao Dam in southwestern Yunnan province, which helped give Hanergy the financial foundation it needed to expand.

Since then Mr. Li has focused on solar, which is at the center of what he touts as a coming clean-energy revolution.

Mr. Li added to his bet on solar during Hanergy Thin Film’s run-up. Employees and others within Hanergy exercised about 93 million options between December and April, with many cashing in on options redeemable for about 17 and 25 Hong Kong cents. But Mr. Li in the fourth quarter of last year acquired more than 190 million shares, according to data provider FactSet. Over the last two months he added another 62.2 million Hanergy Thin Film shares to his holdings, according to Hong Kong stock exchange filings, giving him roughly 30 billion shares. He now owns roughly four-fifths of the company’s shares.

In “China’s New Energy Revolution,” Mr. Li predicted that clean energy would make up half of primary energy usage in the world by 2035. That is an aggressive prediction compared with others. BP PLC, which compiles energy data that the industry relies upon, predicts non-fossil fuels including nuclear and hydropower will account for 38% by then, compared with 32% in 2013.

Mr. Li is a member of the Chinese People’s Political Consultative Conference, an advisory body that meets annually along with the National People’s Congress, China’s legislature. At the most recent meeting, he called for China to embrace what he called mobile energy—a new generation of gadgets powered with lightweight solar material like Hanergy’s thin-film technology.

“The country should attach importance” to the growing industry, he said, according to a CPPCC official account. He urged officials to “treat it as a competitive Chinese industry as it has with high-speed railway or the water and electricity industries.”

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