Monday, December 28, 2015

China Telecom shares fall as chairman becomes subject of probe

China Telecom Corp., the nation’s third- largest wireless carrier, fell in Hong Kong trading after its chairman became the latest high-ranking executive to be targeted by anti-graft investigators.

The stock dropped as much as 3% to HK$3.62 (66 cents) in early trading in Hong Kong. China’s Central Commission for Discipline Inspection said in a statement on Sunday that Chang Xiaobing, who headed China Unicom (Hong Kong) for more than a decade before becoming chairman and chief executive officer of China Telecom Corp. in September, is being probed for severe disciplinary violations.

Though the statement from China’s anti-graft authority lacked specifics, it used language often used to refer to corruption investigations. Under President Xi Jinping, anti-graft probes have snared more than 100,000 officials and spanned across areas such as the military, oil industry and the finance sector.

China Telecom said in a filing to Hong Kong’s stock exchange on Sunday evening that although Chang was under investigation, its business operations are “normal,” and that the company would make further disclosures when appropriate.

Chang, 58, moved across from Unicom earlier this year as part of a leadership reshuffle in the telecommunications industry, which like many state-controlled sectors, is undergoing an overhaul to make companies more efficient.

Telecom isn’t the only industry that’s been under scrutiny by investigators. Last month, the anti-graft authority announced a probe of China Southern Airlines Co. Chairman Si Xianmin, and in October, the former chairman of China’s biggest oil producer was sentenced to 16 years in prison for taking bribes and abuse of power.

Not all investigations lead to convictions. The head of the Hong Kong unit of a Chinese brokerage resumed his duties this month after going missing in late November. While Guotai Junan International Holdings. Chairman Yim Fung had been assisting the authorities, neither he nor the company were targets of investigations, the firm said.

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