Trading in 33 Hong Kong-listed stocks was halted on Friday after a number of firms missed a deadline to report annual results, adding another layer of uncertainty to a market that’s trying to recover from a recent low.

Troubled Chinese developers including Sunac China Holdings and Shimao Group Holdings were among the stocks suspended. China Aoyuan Group said publishing unaudited results at this stage could “potentially be misleading to the shareholders and potential investors.” This year’s number compares with 57 for 2021 and at least nine for 2020.

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The barrage of trading halts comes at a bad time for the city’s equity market, after the Hang Seng Index slid to a 10-year low last month. Beijing’s repeated vows to provide stability have failed to restore investors’ confidence, and regulatory risks as well as lockdowns in China are weighing on the earnings outlook.

This earnings season had been expected to be the worst in a decade for Chinese developers beset by a credit crunch, and failure for the firms to come clean on time - as well as a slew of auditor resignations - will only worsen sentiment. Uncertainties over financial transparency may also bring further credit rating downgrades.

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“It is an open secret that auditors adopt very strict requirements for Chinese developers’ audit work this year due to the sector’s liquidity issues and default problems,” said Raymond Cheng, head of China/Hong Kong research at CGS-CIMB Securities. Still, the earnings delays “could hurt improving market sentiment from supportive policy.”

Trading suspensions in Hong Kong can take place due to various reasons. In terms of earnings, a company’s shares will be halted if it doesn’t release audited results three months after the fiscal year ends, according to exchange rules. However, due to Covid-related delays, firms have been allowed to submit unaudited figures by March 31 and file the audited version by April 30 to avoid suspension.

Of the total suspensions, 32 were related to a failure to meet the earnings deadline, according to an exchange spokesperson who did not specify why the other company was halted. Some 192 firms filed unaudited results by the deadline, compared with 27 in 2021 and about 380 in 2020 when the Covid pandemic first emerged. A total of 1,860 listed companies were slated to report by end-March.

The exchange will “engage with the relevant issuers to support their full compliance with the listing rules” and to “keep the period of any trading suspensions to as short as is reasonably possible,” the spokesperson said in an emailed statement.

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The Hang Seng Index fell as much as 2% Friday before paring losses to 0.7%. The Hang Seng Composite Index’s trading volume was about 40% lower than its 30-day average, partly due to a closure of southbound trading.

Credit Downgrades Audit problems were a “key driver” for recent downgrades of Sunac China Holdings and Ronshine China Holdings, Fitch Ratings Inc. said this week.

Potential credit rating cuts following the earnings delays are likely to trigger requests for early debt payments, and “add to their default risks,” said Dean Xiao, flow credit high yield desk analyst at Guotai Junan International Holdings Ltd.

A prolonged trading pause increases the risk of wild stock moves upon resumption. Among last year’s cases, China Huarong Asset Management Co., which was halted for nine months, sank 50% when trading resumed. GCL-Poly Energy Holdings Ltd. surged 82% after a seven-month halt.

Companies could also be booted from MSCI Inc.’s stock indexes within three trading days if their suspensions last for more than 50 consecutive days, according to the index compiler. Such a decision could impact hundreds of billion dollars of passive funds that track related MSCI benchmarks. Huarong was removed from the gauges in June last year.

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