Shares in China's Fosun drop after management reshuffle

Shares related to Fosun Group, one of China's biggest private companies and owner of Club Med, slump after a turbulent week in which it announced a profit surge but also the resignation of its CEO and co-founder

Shares related to Fosun Group, one of China's biggest private companies and owner of Club Med, slumped Thursday after a turbulent week in which it announced a profit surge but also the resignation of its CEO and co-founder.

Shanghai-based Fosun said on Tuesday that CEO Liang Xinjun had resigned from all his posts due to unspecified "health reasons", prompting questions over the direction of a diversified company that has made wide-ranging acquisitions around the world.

Fosun vice president Ding Guoqi also stepped down, saying he needed to devote more time to his family.

Hong Kong-listed shares of Fosun International were down 1.19 percent in afternoon trading on Thursday.

Shares of other Fosun units also lost ground in trading on mainland China's stock markets.

Fosun Group has interests in property, finance, pharmaceuticals, steel and entertainment, and has been aggressively buying assets in Europe and North America.

Among these, in 2015 it emerged the victor in a long-running battle to take over the French holiday resorts group Club Med.

"In the short-term, the (personnel) changes have had slight psychological impact on the firm and its shares," said Dickie Wong, Kingston Securities' Hong Kong-based executive director of research.

"But in the long-run the impact won’t be too big because investors will focus on the firm's future. I believe their financial investments overseas, as well as their diversified businesses, have good future prospects."

Fosun announced on Tuesday net profit surged 29 percent to 10.3 billion yuan ($1.5 billion) in 2016, led by gains in its finance, health and entertainment businesses.

At a Hong Kong press conference on Wednesday, Fosun chairman Guo Guangchang described the resignations as "abrupt" and expressed regret, saying the changes "will have a short-term impact" on the firm.

"A company is like a football team and we constantly need to win. But there will always be players who will need breaks and new players will replace them. You can't always have a 36-year-old play football, that won't work," he said.

Liang, 48, was replaced as CEO by Wang Qunbin, 37, formerly an executive director and also chief financial officer of the company.

Liang co-founded Fosun with Guo 25 years ago.

Liang helmed the firm during a brief disappearance in 2015 by Guo that triggered swirling rumours about the chairman.

Guo later resurfaced, saying he was "assisting in certain investigations" conducted by Chinese authorities, but no details have ever emerged publicly.