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Tuesday, December 15, 2015, 10:40

Fosun's Guo reappears after days off the radar

By Shi Jing In Shanghai

Billionaire chairman shows up at firm's annual meeting

Fosun's Guo reappears after days off the radar
This photo taken on June 25, 2015 shows Guo Guangchang, the chairman of one of China's biggest private-sector conglomerates, Club Med owner Fosun, attending a conference in Hangzhou, in eastern China's Zhejiang province. (PHOTO / AFP)

Listed companies related to Fosun International Ltd had a torrid day on the market on Monday, despite the public reappearance of Chairman Guo Guangchang at its annual meeting in Shanghai.

At least seven companies related to Fosun halted trading on Friday, as reports emerged he had been detained by police.

Both Hong Kong-listed Fosun International and Shanghai Fosun Pharmaceutical Co were hit with the biggest slumps on a day when the benchmark Shanghai Composite Index climbed 2.51 percent.

Shares in Fosun International immediately fell 13.5 percent as the market opened, before recovering slightly to close at HK$12.04 (US$10.03), a 9.75 percent fall. Shanghai Fosun Pharmaceutical dropped 11.04 percent to close at HK$22.15 per share.

There were struggling performances too for Shanghai Ganglian E-commerce Holdings Co Ltd, which dropped 6.41 percent, while Shanghai Yuyuan Tourist Mart Co declined 2.39 percent.

Guo opened the meeting on Monday by stressing that the group's growth remained rooted in China, even though the company has widely invested in many parts of the world.

He said in the future Fosun will rely more heavily on China, and underlined that its industrial structure should be able to gain strength from that, and that it will also make continued effort to build its global operations.

Liang Xinjun, its chief executive officer, said in a global conference call on Sunday night that Guo was then in Shanghai and assisting with a judicial investigation. It was confirmed that he only returned to his home on Monday.

According to legal experts, people who assist in judicial investigations are usually witnesses, and do not lose contact with the outside world in most cases.

Liang stressed in the conference call that Guo's involvement was routine judicial procedure and that it did not indicate the company was in any trouble.

He underlined Guo had also been involved in a number of important corporate decisions over the past few days, and that the company was running normally.

Liang told the meeting he considered a large number of stocks related to Fosun International remained undervalued and that there was a possibility the management team would increase their own shareholdings.

Wang Qunbin, the company's president, said the investigation concerned Guo personally, rather than the company.

Ratings agency Standard & Poor's said Guo's involvement in the probe had yet to affect Fosun's credit rating and outlook, but an "extended investigation" could negatively have an impact on the firm's access to funding and any pending acquisitions.

Created as a small technology consulting firm, Fosun has been expanding aggressively since 2008, investing in areas as diverse as insurance, leisure, finance and property.

Publicly available information shows Fosun International invested in 36 overseas projects in the first half of this year, worth a total $9.8 billion.

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