China's stock markets may have stabilized after a months-long rout, but authorities appear to still be looking for perpetrators, with reports of an arrest and an international manhunt emerging over the weekend.
In what may be the highest profile arrest so far, Xu Xiang, the manager of the Zexi Investment, one of China's largest private money managers, was detained by police Sunday, according to state-owned Xinhua news agency. The fund's website is inaccessible and appears to be crippled.
Police have taken control of Zexi's offices in Shanghai and Beijing, taking away and examining documents and computers as well as interviewing employees, the report said. Xu, who has been transferred to Beijing, is being investigated on charges of suspected insider trading, the Ministry of Public Security said, according to a report from Xinhua.
The 37-year-old Xu, revered as a legendary investor in China, managed over 10 billion yuan ($1.57 billion), a runaway success story after he reportedly dropped out of school following graduation from high school, skipping university entrance examinations in 1993 to start investing in Chinese stocks with a few thousand dollars from his parents.
Some of Zexi's products enjoyed returns of around 250 percent, according to data on Chinese funds. Two of its star products, funds No.3 and No.1, have taken the top two slots on the Chinese performance rankings. Since news of the arrest, five of the stocks Zexi invested in tumbled by their daily limit at market open Monday.
At least two mainland-listed stocks — Ningbo Kangqiang Electronics and Deluxe Family — that were bought by Zexi Investments fell by their daily 10 percent limit after news of the arrest, the Wall Street Journal reported.
Xu's funds reportedly profited handsomely from China markets' recent crash.