China Huarong confirms chairman departs after probe, shares tumble (updated)

XinKong International Capital Holdings

20/04/2018 03:56

* Shares tumble in biggest 1-day fall, hit more than 1-year
low
    * Huarong says "no impact" on business from chairman's
departure
    * Huarong units also fall over 10 pct

 (Adds broker comment; updates stock prices)
    By Adam Jourdan and Donny Kwok
    SHANGHAI/HONG KONG April 20 (Reuters) - China Huarong Asset
Management Co  2799.HK  confirmed its chairman Lai Xiaomin, who
is under investigation for alleged corruption, had stepped down,
sparking an 11 percent tumble in shares of the nation's biggest
bad debt manager on Friday. 
    Reuters reported earlier this week, citing sources, that a
senior banking regulator official would take the helm at
state-owned Huarong after China's anti-corruption watchdog
launched a probe into Lai for "serious discipline violations", a
euphemism for graft.  urn:newsml:reuters.com:*:nL3N1RV26L
    Huarong said in a statement to the Hong Kong stock exchange
late on Thursday that Lai's departure "will not cause any
adverse impact to the business."
    Wang Zhanfeng, head of the Guangdong branch of China's
banking regulator, had been lined up as its new chairman and Li
Xin, chief supervisor of China Orient Asset Management Co Ltd,
would be named president of Huarong, it said.
    Investors sold down the stock sharply when trading resumed
on Friday after being halted earlier this week. The Hong
Kong-listed shares fell 11 percent, their biggest one-day drop,
to hit their lowest level since January last year in a slightly
softer wider market  .HSI . 
    "People are holding back on companies haunted by similar
issues involving management, worried that they might face some
other hurdles even after a management reshuffle," said Steven
Leung, a sales director at UOB Kay Hian. He added that the new
chairman's regulatory background was viewed as a long-term
positive.
    Huarong hit the headlines this year after building up a 36
percent stake in a key unit of embattled private energy company
CEFC China Energy which is acquiring a $9.1 billion stake in
Russia's oil major Rosneft  ROSN.MM .
    The investigation into Lai makes him the latest in a long
line of top Chinese executives coming under fire as China looks
to rein in risks in the financial sector, targeting riskier
lending practices and high levels of corporate debt.
    Huarong Investment Stock Corp Ltd  2277.HK  and Huarong
International Financial Holdings Ltd  0993.HK  - which also
earlier suspended trading of their shares - both dropped over 10
percent in late trade on Friday. 

 (Reporting by Adam Jourdan in Shanghai and Donny Kwok in Hong
Kong; Editing by Richard Pullin and Muralikumar Anantharaman)
 ((adam.jourdan@thomsonreuters.com; +86 21 6104 1778; Reuters
Messaging: adam.jourdan.thomsonreuters.com@reuters.net))