Stocks linked to missing Chinese tycoon plunge

Mr Xiao with his female bodyguards at Hong Kong's Four Seasons Hotel. He was taken by mainland security agents from the hotel last week, according to reports.
Mr Xiao with his female bodyguards at Hong Kong's Four Seasons Hotel. He was taken by mainland security agents from the hotel last week, according to reports.PHOTO: SCREENGRAB FROM YOUTUBE/BOXUN.COM

They sink by daily limit as investors ignore statement saying all is normal at his firms

SHANGHAI • Stocks linked to missing Chinese billionaire Xiao Jianhua tumbled yesterday as investors ignored a statement saying business at his vast empire was "normal" following reports of his abduction by security agents.

Shanghai-listed companies controlled by Mr Xiao's Tomorrow Holdings dropped by their daily limit on the first trading day after a week-long Chinese New Year holiday. Chemical company Baotou Tomorrow Technology sank 5 per cent - the maximum allowed for companies at risk of being delisted - while sugar-maker Baotou Huazi Industry and cement manufacturer Xishui Strong Year both plunged 10 per cent.

Mr Xiao, 46, is the founder of Tomorrow Group - a mainland holding company with business in many areas, including financial institutions, information technology and energy. He was last seen at his apartment in Hong Kong's harbourfront Four Seasons Hotel, according to reports in the city this week.

He was taken by mainland security agents last week, according to overseas Chinese-language media.

More details of the tycoon's disappearance emerged on Thursday as a senior government source with knowledge of the case told the South China Morning Post (SCMP) that Mr Xiao left the Four Seasons Hotel "smoothly" with two female bodyguards and six other unidentified people in plain clothes at around 3am on Jan 27.

The group was picked up by two cars at the main entrance. It was 3pm when the tycoon crossed the border into Shenzhen in a vehicle at Lok Ma Chau checkpoint.

It is understood that Mr Xiao's wife, Ms Zhou Hongwen, reported his disappearance to police via her lawyer last Saturday, but withdrew it the next day because he contacted her to say he was safe.

She is now in charge of the business empire, according to SCMP.

A statement from the company late on Thursday said "production and operations of Tomorrow Holdings and its related companies are all normal".

Mr Xiao's case has sparked new fears that freedoms in Hong Kong are under threat from Beijing.

The SCMP said he is in the mainland "assisting investigations" into the stock market turmoil of 2015.

Shanghai's composite index collapsed almost 40 per cent in just two months in the summer of 2015. The plunge came after the authorities helped inflate a bubble in the market by encouraging investment but when it burst, officials sought to pin blame on market manipulators.

It is unclear how Mr Xiao is being linked to the crisis, but mainland investigators have targeted several investment executives on suspicion of insider trading since 2015.

In a notice dated yesterday and posted on the door of Tomorrow Group's listed Beijing office, the firm said it had not been told to cooperate in any legal investigations, adding that it could use legal means to go after media outlets for spreading rumours.

Chinese Foreign Ministry spokesman Lu Kang declined to comment yesterday on Mr Xiao's case at a daily news briefing.

Mr Xiao is 32nd on the 2016 Hurun China rich list, China's equivalent of the Forbes list, with a net worth of US$5.97 billion (S$8.4 billion).

AGENCE FRANCE-PRESSE, REUTERS

A version of this article appeared in the print edition of The Straits Times on February 04, 2017, with the headline 'Stocks linked to missing Chinese tycoon plunge'. Print Edition | Subscribe