One month after the head of a Hong Kong brokerage vanished, his whereabouts remain a mystery.

Those who suspect Yim Fung, the missing chairman and chief executive officer of Guotai Junan International Holdings Ltd., was pulled in to assist authorities with an investigation in mainland China include Christopher Cheung, a Hong Kong lawmaker who represents the finance industry -- and who’d been due to attend a dinner with Yim on the day he was reported missing.

But no one knows for sure.

Guotai Junan International said in late November it had lost contact with Yim, a development that coincided with probes sweeping through China’s finance industry that have entangled at least 16 people, including securities executives, a fund manager and regulators.

The company’s shares plunged 12 percent on Nov. 23, the day the firm said it hadn’t been able to reach Yim for five days.


The surprise that rippled through Hong Kong’s securities industry with Yim’s disappearance was amplified by his reputation as a cautious, conservative, successful businessman and his prominence in the city, including as a former chairman of the Chinese Securities Association of Hong Kong.




Guotai Junan International has declined to comment further.

The case underscores a challenge for Hong Kong: How does the city maintain its reputation for transparency and rule of law, key credentials for any global financial center, if executives can simply disappear without explanation?

Mainland Connection

Yim may be being questioned in connection with his former boss, Cheung said in an interview.

That man, Yao Gang, a vice chairman at the China Securities Regulatory Commission who formerly supervised initial public offerings, is under investigation for “alleged serious disciplinary violations,” the Communist Party’s Central Commission for Discipline Inspection said Nov. 13.

Yao and Yim worked together at Guotai Junan Securities Co., the state-owned firm that is now the mainland’s second-biggest brokerage by market value and which owns the Hong Kong-listed unit.

Yao was general manager from 1999 to 2002 before returning to roles at the CSRC.

No comment has been available from Yao or others caught up in China’s probes.

“When people are taken into custody or house arrest, there’s very little transparency over that in the mainland,” said David Webb, a shareholder activist who is a deputy chairman of the city’s takeovers panel and a former director of Hong Kong’s stock exchange.

“The rule of law and disclosure is underdeveloped in China. Having an underdeveloped rule of law is a problem -- markets and investment depend on the rule of law.”

Cautious Reputation

Guotai Junan International’s slide after Yim’s disappearance was mirrored at Hong Kong-listed Fosun International Ltd. after a Chinese magazine reported that the firm’s billionaire Chairman Guo Guangchang had gone missing.

Fosun International shares plunged 9 percent in heavy trading on Dec. 14, even as Guo returned to work.

The surprise that rippled through Hong Kong’s securities industry with Yim’s disappearance was amplified by his reputation as a cautious, conservative, successful businessman and his prominence in the city, including as a former chairman of the Chinese Securities Association of Hong Kong.

“I’ve known Yim Fung for more than 10 years. As a friend and industry peer, I was shocked to know that he’s missing,” said Ronald Wan, chief executive at Partners Capital International Ltd. in Hong Kong.

“It’s natural for people to associate the events with China’s crackdown.”


Mainland-domiciled companies traded on Hong Kong’s stock exchange now number 540, more than 10 times the number in the year 2000, according to data compiled by Bloomberg.

That means investors in Hong Kong, which is rated highly for judicial independence, are increasingly exposed to decisions made in China.



Permanent Resident

Born in mainland China, Yim is in his 50s, and has lived in Hong Kong for more than a decade.

His long run with Guotai Junan International -- he joined in 2000 -- has been partly because of his status as a permanent Hong Kong resident, which meant he wasn’t transferred back to the mainland after only a few years, as executives of other state-owned enterprises operating in the city have, he told a Hong Kong Institute of Directors publication in 2013.

In its statement, Guotai Junan International didn’t give any details of its final communication with Yim, nor did it say whether he was in Hong Kong at the time.

Yim is close to the CSRC’s Yao, Cheung said.

Yim had talked of hosting Yao during Yao’s visits to Hong Kong, according to people who know Yim and asked not to be identified because of the sensitivity of the investigation.

China’s Way

“China has its own way of investigating, but they should understand that Guotai Junan is registered in Hong Kong,” Cheung said.

“Transparency is important to Hong Kong-listed companies.”

Yim built the operation without the types of acquisitions that contributed to the expansions in Hong Kong of rivals such as Citic Securities Co. and Haitong Securities Co.

The firm listed on the stock exchange in Hong Kong in 2010, the first mainland-owned brokerage to do so.


His absence from a Nov. 17 event to mark the anniversary of Hong Kong’s stock market link-up with Shanghai may have been an early clue that something was up, according to Cheung’s account.

Still, even among Yim’s close contacts, accounts vary as to his movements and travel plans before he disappeared, interviews with associates showed.



Any protracted disappearance of Yim could disrupt the firm’s expansion, which has been focused on boosting its fixed-income and fund management businesses and includes plans to set up representative offices in Singapore and London, according to a person familiar with the matter, who asked not to be identified because the plans are private.

Yim has been a high-profile individual, taking the stage at the Asian Financial Forum in Hong Kong and Shanghai’s Lujiazui forum, where guests have ranged from Chinese central banker Zhou Xiaochuan to former U.S. Treasury Secretary Larry Summers.

Yim has spoken on topics such as financial collaboration between China, Hong Kong and Taiwan.

Anniversary Absence

His absence from a Nov. 17 event to mark the anniversary of Hong Kong’s stock market link-up with Shanghai may have been an early clue that something was up, according to Cheung’s account.

Still, even among Yim’s close contacts, accounts vary as to his movements and travel plans before he disappeared, interviews with associates showed.

Security staff outside Yim’s registered home, in a towering luxury complex alongside Victoria Harbour, wouldn’t comment when approached by Bloomberg.

Disappearances from the securities industry in Hong Kong aren’t unprecedented.

A director of a small brokerage skipped to Australia in 2006 during a Securities and Futures Commission investigation, only to be later extradited and sentenced to jail for theft and fraud.


“The transparency of mainland companies is absolutely a lot less than those in Hong Kong,” said Hu Xingdou, an economics professor at the Beijing Institute of Technology.

“The risks from investing in mainland companies are definitely higher.”



Another Case

In a similar vein, a director of a collapsed brokerage went missing for more than two months in 1998, fleeing the city before being arrested at the airport on his return.

There’s been no suggestion that Yim’s case is of that type.

Mainland-domiciled companies traded on Hong Kong’s stock exchange now number 540, more than 10 times the number in the year 2000, according to data compiled by Bloomberg.

That means investors in Hong Kong, which is rated highly for judicial independence, are increasingly exposed to decisions made in China.

“The transparency of mainland companies is absolutely a lot less than those in Hong Kong,” said Hu Xingdou, an economics professor at the Beijing Institute of Technology.

“The risks from investing in mainland companies are definitely higher.”