Shares plunge after 'China's Warren Buffett' caught in probe

Why are China's rich facing government scrutiny?
Why are China's rich facing government scrutiny?

Shares of a Chinese conglomerate plunged Monday in Hong Kong after the company announced last week that its billionaire chairman had been caught up in a government probe.

Fosun International shares tumbled 10%, while Fosun Pharmaceutical lost around 12%. Hong Kong's benchmark Hang Seng index was down 0.7%.

Both companies were suspended from trading last Friday after its chairman, Guo Guangchang, was reported to be missing. The parent company later confirmed that Guo was assisting authorities in an investigation.

The firms are linked to Chinese conglomerate Fosun Group, which has interests in everything from real estate to entertainment, and recently bought the luxury resort chain Club Med. It also owns a stake in Cirque du Soleil. In 2013, it bought the landmark One Chase Manhattan Plaza skyscraper.

Guo is China's 17th richest man, with an estimated wealth of about $7.8 billion, according to the Hurun Report, which publishes a ranking of China's wealthy. The billionaire has described himself as a student of famed investor Warren Buffett.

Photos surfaced on social media Monday that appeared to show Guo speaking at the company's annual meeting. While the photos appear to be from today, Fosun hasn't confirmed his attendance. Calls to the company went unanswered.

A string of top Chinese executives have mysteriously disappeared this year, as officials crack down on the financial sector, casting around for individuals to blame for the country's summer stock market crash. Once individuals go missing, there's no telling when they'll resurface; if they do, there's often scant information about what happened.

The strange case of China's missing CEOs underscores the murky nature of China's legal system, where confessions are sometimes coerced, and trials can happen behind closed doors. Since President Xi Jinping took office in 2013, a widening anti-corruption campaign has swept up scores of executives and businessmen in a similarly opaque way.

Related: Chinese executives keep going missing

China's largest brokerage firm, Citic Securities, said last week it wasn't able to get in touch with two top executives. Citic had previously disclosed that the firm, and a number of its executives, were under investigation by Chinese market regulators.

In late November, the Hong Kong subsidiary of another major Chinese brokerage said its CEO, Yim Fung, had been missing since November 18, and appointed a replacement. The company, Guotai Junan, hasn't said anything since, and Yim's whereabouts are still unknown.

Related: Giant Chinese brokerage can't find its CEO

Zhang Xun, president of the Agricultural Bank of China, and well-known fund manager Xu Xiang have also been detained, Chinese state media have reported.

Hundreds of people have been arrested for alleged rumor-mongering following the wild stock market swings, including prominent journalists, and even officials with China's securities regulator.

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