Stocks linked to missing Chinese billionaire Xiao Jianhua tumbled Friday 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 Xiao’s Tomorrow Holding dropped by their daily limit on the first trading day after a week-long Chinese new year holiday.
Chemical company Baotou Tomorrow Technology Co. sank five percent — the maximum allowed for companies at risk of being delisted — while sugar-maker Baotou Huazi Industry and cement manufacturer Xishui Strong Year Co both plunged 10 percent.
Financier Xiao 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.
However, a statement late Thursday said “production and operations of Tomorrow Holding Ltd and its related companies are all normal”.
Xiao’s case has sparked new fears that freedoms in Hong Kong, a semi-autonomous city with a separate legal system from the mainland, are under threat from Beijing.
The South China Morning Post in Hong Kong said Xiao, the founder of Beijing-based Tomorrow Group, is in the mainland “assisting investigations” into the stock market turmoil of 2015.
His wife Zhou Hongwen is now running the business, the report said Friday.
Shanghai’s composite index collapsed almost 40 percent in just two months in the summer of 2015.
The plunge came after 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 Xiao is being linked to the crisis, but mainland investigators have targeted several investment executives on suspicion of insider trading since 2015.