Hong Kong Exchange and Clearing (0388) yesterday defended its decision to allow China High Precision Automation (0591) to resume trading.
The mainland firm had earlier hidden part of its operation from auditors, citing "national security" concerns.
Shares of the instrument maker - whose products are used in Chinese rockets, according to chairman Wong Fun-chung - rebounded as much as 21 percent yesterday after plunging 54 percent on Friday when they resumed trading following a 10-month hiatus.
But then the stock gave up most of its gain to close at HK$1.28, up just 5 percent.
The company's former auditor KPMG quit after it was unable to obtain important information on High Precision.
It then obtained proof from Chinese authorities that some of the company's products are state secrets and forbidden to be published.
Mark Dickens, head of listing at HKEx, said the bourse has spoken to both the Shanghai and Shenzhen exchanges on the issue, and that the company showed enough proof of its accounts.
Separately, HKEx's second-quarter profit, to be published tomorrow, may come in at HK$1.1 billion on lower turnover and listing activities, according to a Bloomberg survey, which would be 18 percent down from a year ago.