Guo Guangchang, the chairman of Fosun Group, made his first public appearance on Monday after being held for four days as part of a Chinese investigation but did little to assuage investor concerns as share trading resumed.
Guo, 48, the billionaire co-founder and chairman of China’s biggest privately owned conglomerate, turned up briefly on stage to deliver a speech at Fosun’s annual work conference.
Greeted by warm applause, he told staff about the group’s development strategies and about “being rooted in China” while investing globally without mentioning the investigation, according to two company employees who attended the event.
Guo’s reappearance comes four days after he was reported missing, prompting Fosun Group to suspend share trading in mainland China and Hong Kong. The company, which runs an array of businesses ranging from insurance to pharmaceuticals, later clarified that Guo was assisting China's judicial authorities with an unspecified investigation.
It remains unclear what the investigation covers and whether or when it will end, enabling Guo to resume his full duties.
Chinese internet news portal Sohu reported on Friday that Guo was helping with a probe into Ai Baojun, a former vice mayor of Shanghai, who has been under investigation by the country's anti-graft watchdog since early November.
Guo’s reappearance did little to disperse investor concerns over his future and that of his company, leading to a slump in most Fosun-linked stocks once trading resumed on Monday.
The price of Fosun's two listed firms in Hong Kong – Fosun International, the parent company and investment arm of Fosun Group, and Shanghai Fosun Pharmaceutical – plunged by 9.45% and 12.05%, respectively. The benchmark Hang Seng Composite Index, in contrast, ended down just 0.72%.
In mainland China, the share price of five listed companies in which Fosun holds majority stakes also fell on Monday. Shanghai Ganglian E-Commerce Holdings and Shanghai Fosun Pharmaceutical Group slid the most, losing 6.41% and 3.77%, respectively, just as the Shanghai Composite Index posted the biggest single-day gain since early November.
In bond markets, Fosun International's outstanding 2020 dollar issue rallied about 4% to 97.78 cents, having already sunk on Friday as speculation swirled about Guo’s mysterious whereabouts.
Conference call
In a conference call with investors late on Sunday, Fosun executives said Guo was in Shanghai and was “assisting judicial authorities” with a certain investigation, emphasising that it was about personal issues and not about the company’s business.
They added that Guo was still able to take part in the company’s decision-making in “appropriate ways” without elaborating and sought to calm investor worries about the company financial situation.
“Don’t worry. The company is not in crisis,” said Liang Xinjun, the chief executive officer of Fosun International.
He added that Fosun had cash and assets available for sale totaling of Rmb97 billion ($15 billion) and an insurance float of Rmb150 billion ($23 billion) as of June 30, when its net debt ratio was 50.7%.
Any extended investigation into Fosun chairman Guo could, nonetheless, have “a negative impact on the company's access to funding and its pending acquisitions,” according to ratings firm Standard & Poor's.
Based on data provided by Dealogic, Fosun currently has about seven pending outbound transactions worth at least $3.27 billion (one deal’s value hasn’t been disclosed), including its bid for German private bank Hauck & Aufhaeuser Privatbankiers and the Belgium-based merchant bank BHF Kleinwort Benson.
