As demand for soybeans, copper and other raw materials surged, investors flocked to Huaxia Commodities Spot Exchange Co (華夏商品現貨交易所), plunging into the risky world of commodities in search of better profits amid slumping Chinese stock prices.
But now Huaxia’s boom has collapsed amid accusations its founder fled to the US last week with up to US$25 million in customers’ money. Police have launched a manhunt for him and say several employees have been detained. Investors, including farmers and entrepreneurs, besieged Huaxia’s Beijing headquarters last weekend, demanding their money.
The collapse comes at a time when China’s stock market is near 16-month lows and investor confidence is weak.
Police said they are “making every effort” to find Huaxia founder Guo Yuanfeng (郭遠峰), wanted for unspecified “economic crimes.”
A police statement said several employees were detained but gave no details. Police spokesmen declined to elaborate.
Driven by a boom that is expected to see China’s economy grow by at least 9 percent this year, commodities trading grew 142 percent to 35 trillion yuan (US$5.1 trillion) in the first half of the year, compared with the same period last year, the China Futures Association said.
Small traders are allowed under regulations issued last year, but Huaxia might have been engaged in bigger, longer-term trading than its status allowed, the financial newspaper 21st Century Business Herald said.
The Chinese newspaper Legal Daily, citing unidentified sources, said 170 million yuan in investors’ money was missing.
The police statement said Guo’s whereabouts were unknown. The 21st Century Business Herald said he flew to Los Angeles last Tuesday.
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