A veteran mainland Chinese financial executive is under investigation by authorities, the latest instance of Beijing’s tightened oversight of the country’s embattled securities sector.
Zhao Xuejun, chairman of Harvest Fund Management, has resigned from the mutual fund house because of the investigation, according to a statement published by the Beijing-based company on Friday. Co-chairman An Guoyong has taken over as acting chairman.
“The board has made proper arrangements to keep the management, investment and research teams stable,” the mainland’s fourth-largest fund house said in the statement. “Our business operations are normal.”
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The statement did not elaborate on the wrongdoings committed by Zhao. It also did not name the law-enforcement authority that has detained him.
Zhao, 58, who holds a PhD in economics from Peking University’s Guanghua School of Management, became president of Harvest in 2000. In 2017, he was named chairman and president.
He is viewed as an open-minded professional with an international perspective on the mainland’s stock market. Under his leadership, Harvest has evolved from a pure manager of mutual funds into an asset management conglomerate whose businesses range from real estate and equity investment to intelligent investment research services.
Harvest has 1.57 trillion yuan (US$219 billion) of assets under management and has generated nearly 200 billion yuan of returns for its investors, according to the company’s website.
A potential downfall of Zhao will add to evidence that Beijing is intensifying its crackdown on the securities sector amid a flagging stock market.
China’s National Audit Office has sent inspection teams to top mutual fund firms, aiming to weed out illegal behaviour by the cash-rich institutions. The clean-up campaign is expected to end in September, two sources with knowledge of the matter told the Post.
Most of the country’s leading brokerages and asset management firms are state-owned.
The high salaries paid by China’s financial services industry does not align with with President Xi Jinping’s initiative of common prosperity. Photo: EPA-EFE alt=The high salaries paid by China’s financial services industry does not align with with President Xi Jinping’s initiative of common prosperity. Photo: EPA-EFE>
Mainland-listed A shares have been struggling to find a fresh catalyst as the economy struggles with headwinds from weak consumer spending and a lingering downturn in the property market. Demand for stocks has also been waning after a rebound triggered by state intervention ran out of steam, as investors shifted their focus to growth prospects and corporate earnings. The CSI 300 Index has declined almost 10 per cent from a high in May.
The financial services industry is seen as elite in China, as it pays lofty salaries to employees. This does not align with President Xi Jinping’s initiative of common prosperity, which stresses equitable wealth distribution at a time when the nation is facing economic headwinds.
Top regulators plan to cap the annual salaries of financial workers at around 3 million yuan, as part of a campaign to eradicate extravagance and hedonism from the industry and narrow the wealth gap, sources have previously told the Post.
They added that more senior officials with brokerages and fund houses would be punished for their corrupt practices over the coming months.
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