Share prices of Shanghai-based property developer Future Land Development Holdings Limited plunged by more than 23.9 percent following news of the arrest of its founder and chairman, Wang Zhenhua.
The company is currently listed in both Shanghai and Hong Kong. Prior to the news of his arrest, the company's stocks were gaining. Shares of the company in Shanghai rose as trading ended before news of his arrest broke out. Stock prices of Seazen Holdings, which Wang also serves as founder and chairman, gained more than 3.8 percent in Shanghai prior to news of his arrest.
After news of Wang's arrest by Chinese authorities was made public, the company's stocks in the Hong Kong Stock Exchange plummeted by more than 23.9 percent. This represented a massive $1.9 billion loss in the company's overall market value.
Share prices of other companies linked to the Future Land Development also suffered following the news. Xingchengyue Holdings, a company that provides property management services, saw its shares drop by 23.6 percent in Hong Kong.
The 57-year-old Chinese billionaire was reportedly arrested on Monday for allegedly molesting a nine-year-old girl inside a Shanghai hotel.
According to reports citing company officials, Seazen had apparently been conducting an internal investigation into the allegations. The company, unfortunately, declined to provide any further details and authorities have yet to issue a formal statement.
Wang's property development company is one of China's most aggressive developers. Sean currently has around 20,000 employees and over $53.3 billion in assets. Apart from residential properties, Wang's companies also own various malls and shopping centers across Mainland China.
Wang started out as a worker in a textile mill in the early 1980s before entering into the real estate business. He was then able to establish his two companies, Future Land and Seazen, later in his career. Future Land was listed in Hong Kong in 2012, while Seazen made its debut in Shanghai in 2016.
As of last year, Seazen became China's eighth-largest developer by revenue. The stock was also one of the best-performing amongst China's real estate companies. This year alone, Seazen was able to see an increase of over 76.7 percent, trading at more than a hundred times its 2018 earnings.
The success of Wang's companies has resulted in his immense personal wealth, estimated to be somewhere around $6.4 billion. Wang is currently ranked as China's 108th richest man. The real estate tycoon has also been known for his philanthropic activities, including large donations to help teenagers in poorer areas around China.