A market expert has said that the disappearance of Chinese billionaire Xiao Jianhua could be linked to the government’s crackdown on risky stock investments by insurance companies.
Meanwhile, stocks of companies belonging to Xiao’s empire took a nosedive during the first trading day after the Lunar New Year holidays, despite his company’s announcement that everything is OK.
Tomorrow Holding Ltd is involved in a wide range of industries, from insurance to beet farming. It issued a statement through its WeChat account saying that the company is “operating normally.”
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Xiao’s whereabouts are unknown, and there have been unconfirmed reports that he was arrested in Hong Kong by mainland Chinese law enforcement agents for opposing the ruling Communist Party.
Zhang Xin, an analyst at Guotai Junan Securities, told the
Wall Street Journal that the mystery around Xiao’s disappearance could be linked to Beijing’s efforts to discourage speculation in the country’s turbulent stock market.
“The hidden message is that financial conglomerates can participate in the stock market, but just like insurance firms, they should not stir up trouble or collude with powerful figures,” Zhang said.
Regulators have clamped down on speculative stock investments, especially by insurers. The China Insurance Regulatory Commission even called several insurance companies “barbarians” for engaging in short-term trading that could be detrimental to the market’s stability.
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