China Cosco Shares Slump as Official Under InvestigationJoshua Fellman and Jasmine Wang
China Cosco Holdings Co. dropped the most in more than four months in Hong Kong trading after the nation’s largest shipping company said an executive director is under investigation by a regulatory body.
The stock fell 5 percent to close at HK$3.58 in Hong Kong, the biggest drop since July 3. Its shares in Shanghai trading also fell 3.9 percent to 3.00 yuan today.
Executive Director Xu Minjie is under investigation by a regulatory body, the company said in a Hong Kong stock exchange filing yesterday, without elaborating who is doing the probe. The investigation won’t have a “material adverse effect” on the Tianjin, northern China-based company and its operations, the company said in the statement.
The probe -- which comes after PetroChina Co. in August removed four senior managers amid an investigation by authorities -- signals a broadening crackdown on corruption by China’s new leaders under President Xi Jinping. That may pave the way for more reforms at state-owned enterprises in a conclave of Communist Party leaders, which begins tomorrow, said Hu Xingdou, a professor at the School of Humanities and Social Sciences at Beijing Institute of Technology.
“The anti-graft efforts by the new leadership is unprecedented,” Hu said in a telephone interview today. “The investigations may help the leadership implement market-oriented reforms at state-owned enterprises that are monopolies at the moment.”
PetroChina said in August that four senior managers had been removed amid an investigation by authorities. In July, a court gave former Railway Minister Liu Zhijun a suspended death sentence for abuse of power and receiving bribes.
China Cosco’s board said it will assess the investigation from time to time and advise shareholders of any material developments. The company said it was told about the probe by parent China Ocean Shipping Group Co.
Xu, 54 at the time of China Cosco’s annual report in April, is also an executive vice president of China Ocean Shipping, vice chairman of China International Marine Containers Group Co. and chairman of Cosco Logistics Co., according to data compiled by Bloomberg. He’s a graduate of the Qingdao Ocean Shipping Mariners College and holds business degrees from Shanghai Maritime University and Maastricht School of Management.
Xu didn’t answer his mobile phone today.
China Cosco said last month that its third-quarter net loss narrowed to 1.04 billion yuan ($171 million) from 1.53 billion yuan a year earlier. The company said in August that it was selling stakes in two real estate units to its parent for 3.73 billion yuan to avoid a third straight annual loss that could trigger delisting from Shanghai stock market.