UpdateAvic boss punished for selling shares of subsidiary despite chairman’s vow

The head of a subsidiary at Aviation Industry Corp of China has lost his job for illicitly selling stocks of another subsidiary, in a major embarrassment to the state-owned juggernaut's chairman, who has vowed to defend the country's stock market from "malicious foreign short-sellers".

Shanghai-listed Avic Capital said in an announcement to the stock exchange yesterday that its board had decided to remove managing director Yang Shengjun after it came to light that wholly owned Avic Investment Holdings illicitly sold shares in Avic Heibao, triggering an investigation by the securities regulator.

Avic Heibao said its controlling shareholder and connected parties, Avic Jincheng Group and Avic Investment Holdings, were being investigated by the China Securities Regulatory Commission for reducing stakes in breach of rules, but did not elaborate on the transactions.

An exchange filing by Avic Heibao on June 30 showed Avic Investment, then its second-largest shareholder, dumped all of its 16.8 million shares, or 4.88 per cent of Heibao's issued shares, for 431.4 million yuan (HK$545.9 million) between June 16 and 29, while the largest shareholder, Jincheng, sold 3.4 million shares for 78.8 million yuan between June 5 and 24.

Avic chairman Lin Zuoming was the first senior executive of a state-owned enterprise to blame "malicious" foreign investors for the market rout last month.

In a strongly worded commentary published in state-run Global Times last week, Lin swore to help the market get back on its feet by beefing up share purchases in what he called a stock market war "targeted at the Chinese flag".