Stocks linked to Maoye International Holding Ltd fell sharply in both the Shanghai and Shenzhen markets yesterday after media reports that Huang Maoru, the company's chairman is under investigation.
Chengshang Group Co stocks fell 9.47 percent to close at 21.99 yuan in Shanghai, the biggest one-day decline since November 2008. Maoye International has a 66.77 percent stake in the firm.
"Huang's rumored investigation led directly to the price decline for Maoye and Chengshang," said Li Xiangfeng, an analyst with Tebon Securities.
China Securities Journal yesterday reported Huang Maoru is currently in police custody over his links to former Shenzhen Mayor Xu Zongheng and Gome founder Huang Guangyu, who are under detention.
Huang Guangyu was named China's second-richest man by Forbes in 2008, with an estimated wealth of $2.7 billion. He was detained by Beijing police last year for "economic crimes", and is expected to face charges of bribery and insider trading, the China Securities Journal said on Dec 5, citing unidentified individuals.
Shares of Hong Kong-listed Maoye International plunged 11.23 percent on Tuesday and the company's trading was suspended on Wednesday morning following news of the chairman's detention.
Spokespersons for Maoye International and Chengshang could not be reached for comment and related stocks in Chinese mainland bourses fell sharply.
Shenzhen-listed Qinhuangdao Bohai Physical Distribution Holding Co Ltd also suspended trading yesterday after its shares dropped 4.56 percent to 8.38 yuan per share on Tuesday. Shenzhen International Arcade Property Management Co Ltd shares sank 4.11 percent to 9.1 yuan. Shanghai-listed Shenyang Commercial City Co Ltd shares dropped 4.11 percent to close at 10.49 yuan.
Shanghai bourse filings yesterday revealed that Maoye currently controls 22.7 percent of Bohai and 10.66 percent of Commercial City.
Huang Maoru, a 43-year-old Chaoshen native, enjoyed his first commercial success in Shenzhen's property market in 1992. Huang and his wife Zhang Jing own an 82.68 percent stake in Maoye.
Maoye debuted in Hong Kong in May 2008 and currently has a market value of HK$13 billion as of Dec 15, its last trading day. The company owns 19 department stores, according to its official website.