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Shares in Chinese brokerage slump as chief goes missing

[HONG KONG] Shares in Guotai Junan International dived Monday after the major Chinese brokerage said it could not find its Hong Kong chief, at a time when Beijing is targeting the financial sector in an anti-graft campaign.

Shares in the Hong Kong-listed firm, a subsidiary of Guotai Junan Securities, dropped more than 15 per cent at one point after the company said it had not been able to locate its chairman Yim Fung since Wednesday.

"The company has been unable to reach Dr Yim Fung, Chairman of the Board... since 18 November 2015," the company said in a statement filed to the stock exchange.

"Dr Yim currently cannot discharge his duties," it said, adding that the firm has appointed executive director Qi Haiying as temporary chairman.

Shares in Guotai Junan International stood at HK$2.91, down 10.46 per cent, by the break.

Yim is also a board member of local trade group Chinese Securities Association of Hong Kong.

The circumstances of his disappearance are unclear, but it comes as China targets the financial sector as part of a sweeping anti-graft campaign after a stock market rout that rocked global markets over the summer.

Chinese authorities have been pursuing a hard-hitting campaign against crooked officials since President Xi Jinping took office in 2013, a crusade that some experts have called a political purge.

State media reported earlier this month that Yao Gang, the deputy chief of China's top securities regulator, is under investigation for committing "severe disciplinary violations" - normally a euphemism for graft.

Yao, vice-chairman of the China Securities Regulatory Commission (CSRC), was the general manager of Guotai Junan Securities from 1999 to 2002, according to Bloomberg News.

In October, China's anti-corruption watchdog said it would expand its inspections to major financial institutions, which are already under pressure after a spectacular stock market meltdown.

After soaring 150 per cent in one year, Shanghai stocks went into a tailspin in June, tumbling nearly 40 per cent in a few weeks despite massive intervention by the authorities.

The frantic and clumsy state efforts to stop the bleeding were criticised, with a number of experts questioning the apparent contradiction with Beijing's intention to give a greater role to the market and private sector.

The CSRC played a lead role in the response to the crisis, including launching probes into "malicious short-selling", which the government said was partly to blame for the chaos, and putting a temporary stop on initial public offerings.