Feb. 6 (Bloomberg) -- Soho China Ltd., the biggest developer in Beijing’s central business district, dropped by the most in almost four years in Hong Kong stock trading after a Beijing Times report linked the company to money laundering. Soho denied the claim.
Soho shares plunged 8 percent to HK$6.32 at local closing, the biggest drop since March 30, 2009. The stock was the worst performer on the MSCI China Index as 30-day volatility jumped to 34.9, the highest level since Aug. 29, data compiled by Bloomberg show.
The Beijing Times reported a woman who may have been involved in money laundering and owned 41 properties bought most of them from Soho. The report cited comments posted to a microblog on Sina Corp.’s Twitter-like Weibo service.
“We emphasize again that any accusations about us colluding in money laundering or kickbacks is rumor,” Soho Chief Executive Officer Zhang Xin said yesterday in a statement on her microblog and confirmed by the company.
China on Feb. 4 detained a woman, who owned 41 properties, on suspicion of forging official documents and seals, according to Xinhua News Agency. The revelations come amid a crackdown on corruption initiated after Xi Jinping became the ruling Communist Party’s General Secretary in November.
“Fund managers are usually sensitive to any sort of scandals just to be cautious,” said Johnson Hu, a Hong Kong-based property analyst at CIMB-GK Securities Research. “It shouldn’t impact greatly on the company in the long run because Soho changed strategy last year from property sales to rentals.”
Soho, which traditionally sold most of its projects, would hold on to more of its properties, Zhang said in a Bloomberg Television interview in August.
“We always support cracking down on corruption,” Zhang wrote on the microblog yesterday. “We have no way to know where our clients’ money comes from, but we will cooperate as long as the government investigates.”
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