PHANTOM EXECUTIVE
Trading suspended in company’s shares
Chief executive of a Chinese company under investigation mysteriously disappears.
BEIJING: Prominent Chinese investor and businessman Guo Guangchang had disappeared yesterday, sending shares in his company Fosun International tumbling.
China’s watchdog has been conducting investigations into alleged malpractice on the country’s stock exchange, with several finance executives disappearing to help authorities with their enquiries.
The billionaire Fosun chief executive, dubbed China’s Warren Buffett, has been out of contact since Thursday morning, business magazine Caixin reported. Some social media reports said he was apprehended by police at Shanghai airport.
The South China Morning Post said it had been unable to reach the company’s public relations office, but two other Fosun executives denied the Caixin report and said the company had been in touch with Mr Guo. “It’s a rumour,” said one executive.
Stocks in Fosun saw their trading suspended in Hong Kong after losing 11.4% on the Nasdaq in the United States late on Thursday following Mr Guo’s disappearance.
Trading in affiliated Shanghai Fosun Pharmaceutical was also suspended in Hong Kong. Both suspensions were requested by Fosun “pending the release of an announcement containing inside information”, according to a company statement.
The China Securities Regulatory Commission last month announced proceedings against two brokerages, Citic Securities and Guosen Securities, over the stock market tumble that saw the Shanghai index lose around a third of its value over a matter of weeks this summer.
Beijing blames financial services corporations for the slide, provoked by a long run of private investors buying on credit. Several executives and hedge fund managers have been detained or held for questioning.
Mr Guo, 48, is one of China’s richest men. His Shanghai-based Fosun focuses on insurance, industrial, investment and asset management businesses. It bought French holiday firm Club Mediterranee in May for about US$1.1 billion.
It also owns the US-based Meadowbrook Insurance Group and Ironshore and Portuguese insurer Caixa Seguros.
In Germany, the company controls the private bank of Hauck and Aufhaueser, a stake in fashion house Tom Tailor and is involved in a takeover bid for the BHF Bank in Frankfurt.
Over the past year, senior figures at China Minsheng Banking, China Aircraft Leasing and brokerages Founder Securities and Guotai Junan have all disappeared without initial explanation. Similar absences have afflicted department store chain Ningbo Zhongbai and waste manager Dongjiang Environmental.
Fosun is one of the most acquisitive non-state-owned Chinese companies, so Mr Guo’s sudden absence leaves a lot of plates spinning. It has about $2.2 billion of deals still pending, according to data compiled by Bloomberg.
They include a $586-million offer for Chinese film distributor Bona Film; a $476-million controlling stake in Israeli insurer Phoenix Holdings; and a $232-million takeover of German private bank Hauck & Aufhaeuser.
Fosun has offered $529 million to buy out shareholders in Belgian wealth manager BHF Kleinwort Benson, but was last month trumped by a higher offer from the French investment bank Oddo.
While missing Chinese executives often end up linked to the wide-ranging clampdown on official corruption launched by President Xi Jinping, there is no evidence in this case about what’s happened to Mr Guo.
Chinese portal Sohu.com reported that Mr Guo was assisting with an investigation of former Shanghai vice-mayor Ai Baojun.
Fosun spokesman Chen Bo said operations of the company “remain normal” but did not respond to a request for comment on the Sohu report.
Unlike the subjects of previous crackdowns, Fosun isn’t a state-owned enterprise but a private business, and no small one: it has about $5.3 billion of long-term assets on five continents.
Mr Xi’s investigations have largely been carried out by the Central Commission for Discipline and Inspection, an internal Communist Party body that sits outside the regular legal system and is responsible for bringing party members to heel.
As those investigations mainly involved state companies that the Chinese government has an interest in preserving, they sometimes left shareholders in the affected companies unruffled.