The trading arm of Aviation Industry Corp. of China removed its general manager amid a probe into a potentially illegal stake sale, days after the conglomerate’s chairman blamed hostile forces for a stock market plunge.
AVIC Capital Co. removed General Manager Yang Shengjun after the company told the stock exchange its unit was being probed by the China Securities Regulatory Commission in connection with a stake sale in Zhonghang Heibao, a truck-maker. The stake sale is suspected of violating securities laws.
Zhonghang’s Shanghai-traded shares fell by the daily 10 percent limit on 8 of 9 days through July 8. The drop came amid a broader market plunge that saw the Shanghai Composite lose almost $4 trillion in value after reaching a peak on June 12. In response to the crash, state-owned enterprises were told not to cut holdings of their listed companies, while major shareholders of other firms were barred from selling.
AVIC Capital said in the statement on Wednesday that it will cooperate with the CSRC probe and conduct an internal investigation.
The CSRC probe named AVIC Capital units AVIC Investment Holdings and AVIC Jincheng Corp as targets. In a June 30 filing, Zhonghang said AVIC Investment Holding sold its entire 4.9 percent stake, or 16.8 million shares, for 431.4 million yuan ($69.5 million) between June 16 and June 19.
According to the filing, Jincheng sold 3.4 million shares between June 5 and June 24.
In his interview with China Aviation News published July 19, Lin Zuoming said outside forces had engineered the plunge via market manipulation to humiliate China. He said AVIC had “prepared billions of yuan” to buy stakes in its listed companies and had encouraged employees to buy stocks. The conglomerate, which makes fighter jets for the military, controls at least 20 listed companies.
Zhonghang Heibao rose by the 10 percent limit on Wednesday, driven by a surge in the last 20 minutes of trading.
— With assistance by Haixing Jin