Two investment bankers from Citic Securities, China’s biggest broker, have gone missing, sparking fresh concerns about a state-led crackdown in the wake of this summer’s stock-market collapse.
Citic said it had not been able to contact executive committee members Chen Jun and Yan Jianlin after Chinese media reported the pair had been “requested to assist in an investigation”. The former is head of Citic’s domestic investment bank and the latter is the boss of its international investment unit.
Citic was reported to be under investigation over allegations of insider trading by senior executives earlier this year. Official state news wire Xinhua said in August that four Citic executives had admitted insider trading. Cheng Boming, Citic’s president, was also implicated in the scandal a month later, after Citic said he was under investigation by police. The company said: “Among… employees who are requested to assist in some preliminary investigations, some of them have already successively returned to work. Currently, the company is in normal operation.”
The disappearance echoes an incident in September when the chairman of Man Group China was out of contact for a brief period while she helped the authorities. Li Yifei reappeared days later and dismissed the incident by stressing she had not been forced to assist with an investigation.
The scandal at Citic has already scuppered a proposed takeover of Russell Investments from the London Stock Exchange last month. TA Associates swept in to win the bidding war despite offering a lower price than Citic.
The brokerage is the securities arm of Citic Group, a state-run entity set up as the China International Trust and Investment Corporation in 1979 as one of China’s first investment vehicles. Chinese authorities were forced to intervene in the stock market in late August, after fears of debt-fuelled growth sent its major stock index into a one-day dive dubbed “Black Monday”. The index fell further in subsequent days.The authorities were quick to assign blame to various parties, including journalists, investment banks and hedge funds. Other factors, such as the People’s Bank of China’s decision to allow the yuan to depreciate 3 per cent earlier in the month, had also rattled investors.
The aftershocks are still being felt. Foreign reserves recorded their third biggest decline on record in November according to figures published yesterday, falling by $87bn (£58bn) to $3.43trn. Foreign exchange reserves fell by their most ever in August when they declined by $94bn due to the market shocks.
Shares in Citic Securities, listed in Shanghai, fell 1.8 per cent to 17.91 yuan (£1.85), while the shares of Citic Group, listed in Hong Kong, declined 0.14 per cent to HK$13.90 (£1.19).
