×

Stocks linked to Chinese insurer Anbang fall after report on company's murky structure

Stocks linked to China's Anbang International are tumbling after a respected magazine published a detailed report examining the company's murky structure.

A handful of real estate developers fell in Tuesday's morning session — Gemdale tumbled 3.8 percent, Financial Street Holdings dropped 3.5 percent, China Vanke lost 1.8 percent. Pharmaceutical company Dong-E-E-Jiao was down 3 percent and retailer Chang Chun Eurasia fell 1.6 percent during that period. China Railway, however, bucked the trend with a 1 percent rise.

Anbang is a private firm, but its various arms are among the top 10 shareholders of a number of companies, owning anywhere from 3 percent to 15 percent, according to Reuters data.

Anbang and its chairman, Wu Xiaohui, are fending off allegations made by a prominent weekly Chinese magazine looking at the firm's labyrinthine funding and how its assets grew to a whopping $275 billion. The report by Caixin was published online over the weekend, and alleged that a lack of transparency allowed the firm to obscure transactions between Anbang and its shareholders, hinting that these parties were in cahoots to move money around.

Caixin noted odd coincidences — for instance, many Anbang investors registering their businesses in the same city on the same day, and highlighted examples of shared addresses and contact information between shareholders. It also questioned how Anbang was able to make its multi-billion dollar acquisitions, saying the firm didn't appear to have enough in the bank.

Anbang has threatened to sue Caixin and its editor-in-chief, Hu Shuli, accusing the magazine of "slander" and saying its reports were "false." The company suggested Caixin was retaliating against Anbang because the magazine failed to secure advertising and sponsorship dollars from the insurance company.

Wu Xiaohui, chairman and chief executive officer of Anbang Insurance Group.
Qilai Shen | Bloomberg | Getty Images
Wu Xiaohui, chairman and chief executive officer of Anbang Insurance Group.

The Beijing-based firm was once on a massive shopping spree, blazing a trail of acquisitions around the globe in its aim to become one of the world's largest financial groups. Anbang's Wu even said he wanted the company to have a presence on every continent over the next decade in a 2015 speech at Harvard University.

Anbang made a splash in 2014 with its $2 billion purchase of New York's iconic Waldorf Astoria hotel as it sought to branch out from its core financial business. But its global expansion has hit a snag as recent deals have tanked — last year, Anbang lost its bid for Starwood Hotels to Marriott International, and this year, it failed to acquire Fidelity & Guaranty Life.

More recently, Wu was reported to be in talks with President Donald Trump's son-in-law, Jared Kushner, to invest in a New York skyscraper project, but those discussions also fell through.

Wu is married to the granddaughter of Deng Xiaoping, the Chinese patriarch who championed opening up China, helping the country become the world's second-largest economy.

Wu has generally stayed out of the public eye. But in an unusual move, he granted an interview to a Beijing newspaper last week, Anbang confirmed to CNBC, in efforts to dispel rumors that he was in detention and that his firm was under government investigation.

Chinese President Xi Jinping has waged a wide crackdown on corruption since taking up his post in 2013. Critics say it's merely house cleaning of opponents, while others have championed the campaign to wipe out malfeasance.

Caixin magazine has reported extensively on corruption and has even gone after Beijing for censorship. The publication's editor, Hu, is reported to have strong ties with top Communist Party brass, including a longtime association with China's anti-corruption czar, Wang Qishan.

—CNBC's Barry Huang contributed to this report.