SHANGHAI—Shares of Chinese companies controlled by Zhongzhi Enterprise Group Co., Ltd., founder Xie Zhikun plunged on Monday, after the unexpected death of the rags-to-riches tycoon triggered fears of disorder in a business empire spanning mining to asset management.
All nine listed companies controlled by Xie, 61, including education firm Dalian My Gym Education Technology Co., Ltd. and Xinjiang Zhundong Petroleum Technology Co., tumbled in morning trade, even as they say business activities are normal.
“Investors fear Xie’s death could lead to internal power struggles and management chaos, so they are dumping stocks,” said Yang Hongxun, an analyst at investment consultancy Shandong Shenguang.
The Hong Kong-listed investment holding firm Zhongjin Technology Services Group dropped more than 60 percent, while Shenzhen-listed Success Electronics Co., a maker of liquid crystal display modules, lost 10 percent.
Xie died after suffering a heart attack in the capital, Beijing, on Saturday, Zhongzhi said in a weekend statement.
Also known as Forest, Xie started as an entrepreneur in the timber business and real estate before expanding into financial services.
Founded in 1995, the Zhongzhi group has a portfolio covering a broad range of businesses including new energy vehicles, mining, semiconductors, and property, it says on its website.
It also controls or owns stakes in six financial institutions, four asset management firms, and four wealth management companies.
Liu Yang, chairman of Zhongrong International Trust, which Zhongzhi controlled, is to lead a “funeral committee” for Xie, the company said.
Its members will include Xie’s wife and popular singer Mao Amin, his brother Xie Zhichun, former executive director of Central Huijin, and Shimao Group Chairman Xu Rongmao.
Since 2016, Beijing has been curbing reckless expansion by private conglomerates such as now-failed groups NHA and Anbang.
Zhongzhi’s business has also been shrinking. Xie’s net worth shrank to $1.5 billion in 2019 from $2.1 billion in 2017, according to business magazine Forbes.
“Zhongzhi already faces many challenges. The founder’s death could further weaken the business empire,” added Shenguang’s Yang.
By Samuel Shen and Andrew Galbraith