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Fosun Group

China’s missing tycoon Guo Guangchang back after 'assisting authorities' - but is this the end of the matter?

PUBLISHED : Monday, 14 December, 2015, 11:15pm
UPDATED : Tuesday, 15 December, 2015, 9:06am

Guo Guangchang, the chairman of conglomerate Fosun International who created a stir when he went missing last week, reappeared at a company meet in Shanghai yesterday but his troubles may be far from over.

Guo, 48, one of China’s most famous billionaires who fashions himself after Warren Buffett, went incommunicado on Thursday afternoon. After a day of frenzied media speculation of him being felled by Beijing’s crackdown on corruption, listed companies under his control late Friday announced he was “assisting in certain investigations carried out by mainland judiciary authorities, and may continue to take part in decision makings via appropriate means”.

It is still not clear in what capacity Guo is aiding the “certain” investigations, or whether his assistance in the matter is over.

Li Haifeng, general manager of Fosun Group’s public relations department, declined to address these queries.

READ MORE: ‘Missing’ Fosun chairman Guo Guangchang back at work after ‘helping Chinese authorities with investigation’

When he turned up for the 2016 Fosun Corporate Communications & Marketing Annual Conference yesterday, Guo himself chose to keep out the subject of his brief disappearance from his speech. He is instead, said to have discussed the company’s strategy and reviewed its performance, according to sources.

In a conference call on Sunday, Fosun founding partner and chief executive Liang Xinjun said the authorities were permitting Guo to participate in decision-making involving the group’s affairs. But questions lingered on whether the self-made billionaire’s movements are being restricted.

“It is possible that the authorities made an exception for Guo to attend the annual meet. As you can tell from the way the company has worded its statement, they are not sure if things have returned to normal,” said a senior property analyst at a state-owned brokerage who did not want to be identified.

Property and mining businesses lie at the core of Guo’s empire. Fosun has been busy picking up stakes as Beijing goes about reforming state-owned enterprises (SOEs).

“How can someone in his situation avoid mingling with government officials?” said the analyst, alluding to the scope of being dragged into corruption probes.

“But given that Guo doesn’t seem to be particularly attached to any political bigwig, there is a chance he can steer clear of trouble as long as he finds a better way to coordinate with the authorities,” he said, citing Evergrande as an example of “good coordination”.

Xu Jiayin, chairman of China’s property giant Evergrande Real Estate, has been able to avoid political heat after he bought a football club and took it to the top of the Asia league table.

An official at a Shanghai-based state-owned bank, who also did not want to be named, said Guo’s reappearance partly restored creditors’ confidence but they are highly likely to cut Fosun’s credit lines if they sense he himself is embroiled in any corruption probe.

READ MORE: China’s Fosun tries to calm investor worries, saying its business is normal and chairman in touch with investors and lenders

Fosun International’s stock tumbled 9.5 per cent to HK$12.08 yesterday, a three-month low, after it resumed trading. Shanghai Fosun Pharmaceutical, another listed company controlled by Guo, plunged 12 per cent to HK$21.9 in Hong Kong, and 3.77 per cent in Shanghai to 24.26 yuan.

Fosun International, the parent company of Fosun Group and also the investment arm of Guo’s empire, has spent more than US$8 billion in the past two years in a global shopping spree snapping up insurance companies to travel firms.

Rating agency Moody’s said it is closely monitoring the developments at Fosun. But it is yet to change the rating for Fosun International from Ba3.

In its latest ratings report in May, Moody’s had said Fosun International’s liquidity profile was “weak”, and estimated its unpaid investment obligations would reach around US$4.8 billion by the end of 2015, in addition to the 24.5 billion yuan (HK$29.39 billion) of maturing short-term debt.

Thomson Reuters data shows it owed US$15 billion at the end of June, more than its current market value of US$13.2 billion.