China Rongsheng Heavy Industries Group Holdings Ltd. and Glorious Property Holdings Ltd. both declined in Hong Kong trading after billionaire Zhang Zhirong quit as chairman of the companies.
Shipbuilder Rongsheng tumbled 6.7 percent to HK$1.40 at the close in Hong Kong trading, the lowest level since Oct. 19, and real estate developer Glorious fell 3.2 percent, the most in a month, to HK$1.20.
Zhang, the founder and biggest shareholder in both businesses, quit their boards about five weeks after another company he controlled agreed to pay $14 million to resolve U.S. inside-trading claims. His departure is unrelated to that, iPR Ogilvy in Hong Kong, which handles his public relations, said in an e-mailed reply to questions from Bloomberg News.
The billionaire was leaving “to devote more time to his personal endeavors” and there were no disagreements with the boards, the two companies said in statements yesterday. Zhang told investors he won’t sell any Glorious shares for at least a year and later declined to comment on Rongsheng stock, according to iPR Ogilvy.
“Zhang’s resignation came as a surprise to the market,” said Lawrence Li, a Shanghai-based analyst at UOB-Kay Hian Holdings Ltd., who rates Rongsheng sell. “This may add concerns about the listed companies’ outlook in short term.”
The Hang Seng Index fell 0.1 percent. Rongsheng has plunged 35 percent this year and Glorious has lost 12 percent, compared with a 19 percent gain for the city’s benchmark index.
Zhang is worth $1.4 billion, according to Bloomberg Billionaires Index. He owns almost 48 percent of Rongsheng and more than 68 percent of Glorious.
Rongsheng Chief Executive Officer Chen Qiang replaced Zhang as chairman, the Shanghai-based shipbuilder said in its statement. At Glorious, Cheng Lixiong stepped down as CEO to become chairman. Liu Ning succeeded Cheng as CEO.
Well Advantage Ltd., controlled by Zhang, paid the U.S. settlement after an investigation into $7 million of profit made from trades ahead of Cnooc Ltd.’s announcement of a bid for Nexen Inc. The company neither admitted nor denied wrongdoing, according to a Securities and Exchange Commission statement.
Rongsheng said that Zhang himself suggested leaving. The move showed his “confidence in the management team,” it said in an e-mailed reply to Bloomberg News questions. Zhang didn’t have an executive role. His father, Zhang Dehuang, stepped down as vice chairman of the shipbuilder, according to the company’s statement.
“We respect his decision to focus on his own personal business,” said Doris Chung, a spokeswoman for Hong Kong-based Glorious.