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The disappearance of a star Chinese dealmaker has left his bank struggling to reassure clients and staff, people with knowledge of the matter said on Monday, and has heightened concerns about “key man risk” for investors.

Shares of China Renaissance Holdings 1911.HK fell by as much as 5% on Monday, following a record low in the previous session after the investment bank said it could not contact its founder, chairman and CEO Bao Fan.

The stock ended the day up 0.1% in the Hong Kong market that rose 0.8%.

Though the reasons for Bao’s disappearance are unclear, his case follows a series of incidents in which high-profile executives in China have gone missing with little explanation during a sweeping anti-corruption campaign spearheaded by President Xi Jinping.

Some of them reappeared as abruptly as they disappeared.

China Renaissance said on Thursday in a stock exchange filing that it had no information that Bao’s “unavailability” was related to its business, and that its operations were continuing normally.

China Renaissance co-founder Kevin Xie and its investment banking head, Wang Lixing, who are running the company in Bao’s absence, have asked staff not to believe or spread rumours, according to two sources and copies of their messages to staff seen by Reuters.

“At such a critical moment, everyone should trust the company. Don’t fret and stumble. It’s OK to encounter some difficulties in the short term,” Wang said in his message posted on the company’s Wechat group on Friday.

According to two sources and some media reports, authorities took Bao away earlier this month to assist in an investigation into a former colleague, Cong Lin, the company’s former president.

All the sources, who have knowledge of the matter, declined to be identified due to its sensitivity.

A spokesperson for Beijing-based China Renaissance declined to comment on specific details and referred Reuters to its exchange filing made on Thursday.

Xie and Wang did not immediately respond to Reuters’ requests for comment on Monday.

Beijing’s public security bureau also did not respond to request for comment. Asked during a daily news conference on Friday whether the banker had been detained, Foreign Ministry spokesperson Wang Wenbin said he was not aware of the situation.

The Hong Kong-listed stock, which climbed as much as 3.5% early on Monday, gave up all those gains and fell to as low as HK$6.82. It hit an all-time low of HK$5 on Friday but later recovered some ground to close at HK$7.18, down 28%.

‘Key man risk’

Bao, also China Renaissance’s controlling shareholder, started the firm in 2005 as a two-person team, seeking to match capital-hungry startups with venture capitalist and private equity investors.

It firm later expanded into services including underwriting, sales and trading.

Known to be well connected in the corporate world, Bao was involved with tech mergers including the tie-up of ride-hailing firms Didi and Kuaidi, food delivery giants Meituan 3690.HK and Dianping, and travel platforms Ctrip 9961.HK and Qunar.

“What happened to China Renaissance highlighted the key man risk with some Chinese companies,” Li Nan, professor of Finance at Shanghai Jiaotong University, said.

“A group of Chinese financial institutions rose quickly over the past few years on one to two controllers’ efforts, while it makes these companies particularly vulnerable to any negative headlines that show the controllers are in trouble.”

Key man risk generally refers to the threat posed to a company from over-reliance on a limited number of personnel for decision making.

While it is not uncommon in China for authorities to take away business executives for various reasons, Bao’s disappearance comes against the backdrop of more than two years of sweeping regulatory crackdown on technology companies.

“This should once again remind foreign investors of the relative level of regulatory and governance risk associated with Chinese equities,” said Propitious Research analyst Wium Malan, who publishes on Smartkarma platform. 
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Iran’s troubled currency broke below the psychologically key level of 500,000 rial per U.S. dollar on Monday, as market participants saw no end in sight to sanctions.

The Iranian rial plummeted to a new record low of 501,300 against the U.S. dollar, according to Bonbast.com which gathers live data from Iranian exchanges.

Facing an inflation rate of about 50%, Iranians seeking safe havens for their savings have been buying dollars, other hard currencies or gold, suggesting further headwinds for the rial.

The reimposition of U.S. sanctions in 2018 by former President Donald J. Trump have harmed Iran’s economy by limiting Tehran’s oil exports and access to foreign currency.

Since September, nuclear talks between Iran and world powers to curb Tehran’s nuclear program in exchange for the lifting of sanctions have stalled, worsening economic expectations for Iran’s future. Over the last six months, Iran’s currency has slumped nearly 60% in value, according to Bonbast.com.

Meanwhile, the central bank said it was opening a new foreign exchange center to ease access to foreign exchange and increase the volume of official transactions.

“The rate set in this exchange will become the market’s rate. It should be free from expectation factors that do not reflect our assessment of the country’s financial situation,” Mohammad Reza Farzin, the central bank governor, told state TV on Monday.

Farzin was appointed in December as governor with the key job of controlling the value of foreign currencies, according to IRNA.
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China’s job fairs are making a comeback after being forced online by COVID-19 for three years, but subdued wages and less abundant offerings in sectors exposed to weakening external demand point to an uneven and guarded economic recovery. 

Authorities announced hundreds of such events across the country this month, the latest sign that China is returning to its pre-COVID way of life and that youth unemployment, a major headache for Beijing, may ease from its near 20% peak. 

In a country of 1.4 billion people, job fairs are one of the most efficient ways for employers and workers to connect. Although attendees said their long-awaited return is encouraging, some were not brimming with confidence. 

“I only pray for a stable job, and do not have high salary expectations,” said Liu Liangliang, 24, who was looking for a job in a hotel or property management company at a fair in Beijing on Thursday, one of more than 40 held in the capital in February. “The COVID outbreak has hurt many people. There will be more job seekers battling for offers this year.” 

Employment anxiety is widespread. 

A survey of about 50,000 white-collar workers published on Thursday by Zhaopin, one of China’s biggest recruiting firms, showed 47.3% of respondents were worried they may lose their jobs this year, up from 39.8% a year ago. 

About 60% cited the “uncertain economic environment” as the main factor affecting their confidence, up from 48.4% in 2022. 

Job confidence of those working in consumer-facing sectors, which are recovering faster from a low base, was higher than in sectors such as manufacturing, affected by weakening external demand, or property, which has only just started to show tentative signs of stabilizing, the survey showed. 

A human resources manager at Beijing Xiahang Jianianhua Hotel, who only gave his surname Zhang, said his company had three times more job openings compared with last year, as Chinese resumed travelling. 

By contrast, Jin Chaofeng, whose company exports outdoor rattan furniture, said he has no plans to add to his payroll as orders from abroad are slowing. 

“People in my industry are waiting and seeing, prudently,” he said, adding that he plans to cut production by 20%-30% in March from a year earlier.  

Frederic Neumann, chief Asia economist at HSBC, expects the service and manufacturing sectors to run at vastly different speeds this year, but said overall employment in China should grow. 

“Restaurants, hotels, and entertainment venues are now scrambling to hire staff. This is especially helpful for younger workers,” Neumann said. “The youth unemployment rate should start to fall in the coming months.” 

China’s economy grew 3% last year, in one of its weakest performances in nearly half a century. Policymakers are expected to aim for growth of about 5%, which would still be below the blistering pre-pandemic pace. 

That’s partly because the pain caused by stringent COVID rules persists. 

At another job fair in the capital, Wei, a former cleaner looking for similar work, said she and her unemployed husband are struggling with credit card debt. 

Wei, who has a child in primary school and did not want to give her full name, citing personal privacy, quit her previous job last year after her employer wanted to cut her wages to 3,200 yuan ($465.34) a month from 3,500 yuan despite demanding she work late hours to conduct COVID-related disinfection. 

“We owe the banks hundreds of thousands yuan,” she said. “We are overwhelmingly anxious.” 
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Long before the pandemic shut down Hong Kong’s vibrant retail sector, traders from China crossed the border to purchase everything from cosmetics to cars tax-free for profitable reselling upon returning home, where buyers worried about the quality of locally available products.

The brisk parallel import trade, which included some Hong Kong residents taking goods into China, survived protests by Hong Kong residents who felt it caused shortages of in-demand items such as baby formula and increased prices.

COVID-19 travel restrictions shut down parallel trading more effectively than any law could.

But within days of cross-border travel resuming between China and Hong Kong on Feb. 6, the parallel import trade picked up. Also revived were calls from Hong Kong residents who want the so-called “ants trade” regulated if not shut down.

Near Exit C of the Sheung Shui Station of the Mass Transit Railway (MTR), more than 10 people presumed to be parallel importers gathered to distribute goods around 11 a.m. on Feb. 12, the first Sunday after the border reopened. The station is in the Sheung Shui District of the New Territories, an area of Hong Kong that is closest to Shenzhen, a city in China’s Guangdong province. The Sheung Shui Station is one stop from the immigration control point at Lo Wu.

The number of people with either empty or jammed luggage grew as Sunday wore on. VOA Cantonese observed buying and selling of red wine, daily necessities and food.

Hong Kong Police Commissioner Raymond Siu Chak-yee said during a February 11 press briefing that the Immigration Department and the Food and Environmental Hygiene Department had stepped up crackdowns on popular parallel trading spots by issuing tickets. He said the operation will continue as part of an effort to nip the problem in the bud.

Leung Kam Sing, a spokesperson for the North District Parallel Imports Concern Group, told VOA Cantonese that the parallel import activities resumed sooner than he expected.

“If you look at where we are standing now, some people are already distributing the goods, and there are already bagged goods,” he said, adding that parallel importing thrives in Hong Kong because people in China worry about the quality of pharmaceuticals and cosmetics there.

According to a report by the local newspaper Ming Pao, more than 10 people gathered during the peak period of the parallel import activities near Sheung Shui MTR Station on Feb. 9 and dispersed when police arrived.

Leung said that the “ants trade” before and after the pandemic created a garbage problem in the Sheung Shui area and increased crowds.

He added that some of the traders hold Hong Kong ID cards and called on the governments of China and Hong Kong to cooperate in combating parallel trading activities. “I have repeatedly reiterated that it is not only Chinese mainland tourists but also Hong Kong people who engage in parallel imports,” Leung said. “We all hope that the government will really face up to this problem, for example, continuing to use the blacklist of (parallel importers) who pass through customs. For example, if some Hong Kong people engage in parallel imports, will the Shenzhen customs take some [actions]? If there are things that are out of reach for Hong Kong customs, will there be some actions by Shenzhen customs?”

According to statistics from the Hong Kong Immigration Department, about 2.43 million people from China entered and exited through border control points from Feb. 6-12, or more than the 2.4 million who visited in the entire pre-pandemic month of December 2019, according to the Hong Kong Immigration Department.

Leung, who launched many anti-parallel import activities before the pandemic, said that under the expansive, vaguely worded National Security Law, the group will not begin a campaign. But if parallel trading intensifies, he believes upset local residents might respond spontaneously.

He looked to political groups active in the community for years to “feel the reaction of the residents. I think even if my organization does not carry out (anti-parallel import operations), (the political groups) should all speak out for the residents.”
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