Hong Kong-listed furniture maker Man Wah Holdings, under attack by short-seller Carson Block, resumed trading of its shares on Friday after calling the allegations "groundless."
The company's shares surged when the Hong Kong session opened and are up around 17 percent by 10:00 a.m. HK/SIN. Man Wah halted trading of its shares at 2:30 p.m. HK/SIN on Wednesday after Block named the company as his next target.
Block, the founder and chief investment officer of Muddy Waters, said Man Wah has undisclosed debt and is less likely to be profitable. He also raised questions about the company's alleged inconsistencies in taxes and China sales growth.
CNBC has sent an email to Muddy Waters seeking further comment.
In a nine-page stock exchange filing on Friday morning, Man Wah said the allegations are "groundless and contains various misrepresentations, malicious and false allegations and obvious factual errors about the Group."
"The Company has also instructed its legal advisers to make a formal complaint to the Securities and Futures Commission of Hong Kong against Muddy Waters Capital LLC," it wrote.
Analysts from Citi Research had written in a Wednesday note that Block's arguments against Man Wah "appear groundless.
They added that Man Wah "deserves to trade at a premium to the average valuation of the Chinese textile/footwear manufacturers" due to its strong brand equity and prospects to book better margins.