After a 17-month suspension, mainland China’s large private investment bank, Huaxing Capital, resumed trading on the Hong Kong Stock Exchange yesterday (September 9) only to see its stock price plummet by over 66%. Founded by Bo Fan, who resigned earlier this year, his wife, Xu Yanqing, has stepped into the spotlight.
Upon resuming trading on the Hong Kong Stock Exchange on September 9, Huaxing Capital’s stock price plunged by 72% at the opening bell. It closed with a 66.3% drop at HK$2.45 per share. Consequently, its total market value decreased to HK$1.393 billion from HK$4.129 billion before the suspension, evaporating HK$2.736 billion with the stock price hitting a historic low.
The company had been under pressure due to recent losses and the investigation of its former Chairman and CEO, Bo Fan, which led to the 17-month trading halt.
In February last year, Huaxing Capital announced that they were unable to reach Bo Fan, sending shockwaves through the Chinese financial industry.
Subsequently, Huaxing Capital Holdings issued a statement that its controlling shareholder, Bo Fan, was currently assisting the relevant authorities of the Communist Party of China in an investigation. Despite Bo Fan’s resignation, the repercussions of the investigation still linger.
As a result of the turmoil caused by this incident, the company’s operations and financial situation were adversely affected, hampering the audit process and resulting in the delay of the 2022 financial report, ultimately triggering the trading suspension starting from April 3, 2023.
Co-founded by Bo Fan in 2005 with two others, Huaxing Capital still holds nearly 49% of the company’s issued shares.
In April 2023, due to Bo Fan being taken away by the Chinese authorities for investigation, the refusal of auditors to sign the annual report led to Huaxing Capital’s 1 year and 4-month trading halt.
Reports indicate that Bo Fan has been detained by discipline and supervision officials, with no explanations provided for his disappearance so far.
According to documents submitted by Huaxing Capital to the Hong Kong Stock Exchange, the company reported a loss of 471.9 million RMB for the year 2023 and a loss of 73.8 million RMB for the six months ending on June 30.
Bo Fan’s disappearance has raised concerns among employees and clients about the company’s future.
On September 6, Huaxing Capital Holdings announced that Bo Fan’s wife, Xu Yanqing, has been appointed as a non-executive director, while Sun Qianhong resigned as a non-executive director, both effective from September 6.
The report for the first half of the year showed that as of the end of June this year, the total number of employees at Huaxing Capital was 521, a 30% decrease from the end of 2022.