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Corruption probe hits China Resources' HK units

Published 22/04/2014, 07:21
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HONG KONG (Reuters) - Shares of all five Hong Kong-listed companies of China Resources Holdings Co Ltd fell on Tuesday, wiping over $3 billion (1 billion pounds) off its market capitalisation after China's top anti-corruption body launched a probe into its parent group chairman.

The selloff hit stocks of subsidiaries spanning energy, infrastructure, property and consumer businesses, led by China Resources Power Co Ltd <0836.HK> which fell more than 11 percent in its worst day since July 17 last year.

"The news triggered concern over their longer term prospects especially those (firms which) rely on acquisitions to achieve growth," said Alex Wong, a director at Hong Kong-based brokerage Ample Finance Group.

"It may not be easy for them to secure new projects going forward."

China Resources Power was followed by 21:1313 <1313.HK>, which dropped 5.8 percent, and 21:1193 <1193.HK>, which slid 2.8 percent.

Retail-focused 21:0291 <0291.HK> fell as much as 6.1 percent, heading for its biggest drop since February 25, and 21:1109 <1109.HK> lost 3.6 percent.

The morning selloff wiped out more than $3 billion in market capitalisation, according to Reuters calculations. The benchmark Hang Seng Index <.HSI> slipped 0.3 percent.

Shares in 21:0175 <0175.HK> - where China Resources group chairman Song Lin serves as an independent non-executive director - were also hit, falling to their lowest level in five weeks.

The Chinese car maker said in a Hong Kong stock exchange filing, however, that the investigation would not have "a material adverse impact" on its business.

Song is being investigated for "serious discipline and law violations," or suspected corruption, the official Xinhua news agency reported.

He has been removed from his post, although he has denied the allegations.

China's top anti-corruption agency, the Central Commission for Discipline Inspection, is leading the probe, which comes amid an official campaign against corruption that has already ensnared a number of executives in state-owned enterprises.

(Reporting by Donny Kwok and Lee Yimou; Additional reporting by Nishant Kumar; Editing by James Pomfret and Stephen Coates)

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