Jailed Chinese tycoon's stock reaps $1.2b in gains

Value of stake in firm he founded doubles in HK stock market surge

Jailed tycoon Huang Guangyu has seen the value of his stake in Gome Electrical Appliances more than double since last month.
Jailed tycoon Huang Guangyu has seen the value of his stake in Gome Electrical Appliances more than double since last month.

HONG KONG - Being behind bars has not stopped the founder of one Chinese appliance seller from booking gains approaching US$1 billion (S$1.3 billion) in Hong Kong's surging stock market.

Businessman Huang Guangyu, who was jailed in 2010 for bribery and insider trading, has seen the value of his stake in Gome Electrical Appliances more than double since last month, as mainland Chinese investors take advantage of reduced trading restrictions and pour money into the former British colony.

The Beijing-based electronics retailer was, as of the close of trading on Wednesday, one of the Hang Seng Composite Index's best-performing stocks since the H-share rally began on April 8.

The company was boosted by perceptions that it is undervalued compared with rivals, according to Citigroup and CCB International Securities recently.

"I wouldn't be unhappy that my wealth has doubled, but equally, it's nothing to do with anything the company has done," said Mr Andrew Sullivan, head of sales trading at Haitong International Securities Group in Hong Kong. "It's all to do with the perception of the company."

Huang's windfall is another consequence of a market rally that has inflated the wealth of some of Asia's richest men to dizzying heights. As of yesterday's close, Dalian Wanda chairman Wang Jianlin's wealth surged 45 per cent this quarter to US$43.8 billion, while Fosun Group chairman Guo Guangchang saw a gain of 33 per cent to US$8.4 billion, according to the Bloomberg Billionaires Index.

Gome's shares have soared 114 per cent to HK$2.40 since last month. That added HK$7.04 billion (S$1.2 billion) to the value of the 32.4 per cent stake Huang holds with his wife, Ms Lisa Du Juan, according to data compiled by Bloomberg.

Gome rose as much as 6.6 per cent to HK$2.44 yesterday, as Hexun.com reported Huang could soon be eligible for release from prison on parole as he nears the mid-point of his jail term.

Huang, who was once China's richest man, was sentenced to a 14-year prison term. Despite a failed post-conviction bid to win control of Gome's boardroom, Huang and his wife remain the company's largest shareholders, according to the company's annual report for last year.

Gome's investor relations executive Zhang Sujing said the company did not have information on any potential early release for Huang and declined to comment further.

Wagers that the company's share price will fall have also eased.

Short positions represented about 10.4 per cent of Gome's outstanding shares as of May 12, versus a four-year high of 15.3 per cent on April 27.

Gome, which operates more than 1,000 stores selling TV sets, washing machines and other appliances on the mainland, is benefiting from the establishment of programmes to allow cross-border trades between Hong Kong and the financial hub of Shanghai. The prospects of a similar tie-up with the southern city of Shenzhen is also driving interest in the company, Citigroup said in an April 7 report.


Join ST's Telegram channel and get the latest breaking news delivered to you.