China billionaire-linked stocks plunge in Shanghai

Stocks linked to missing Chinese billionaire Xiao Jianhua tumbled Friday as investors ignored a statement saying business at his vast empire was "normal" following reports of his abduction from Hong Kong by security agents.

Shanghai-listed companies controlled by Xiao's Tomorrow Holding dropped by their daily limits in the first trading day in China after the week-long Lunar New Year break.

Chemical company Baotou Tomorrow Technology Co., which already was at risk of being delisted due to poor profits, closed five percent lower, the maximum allowed for companies under such warnings, at 10.17 yuan ($1.48).

Sugar producer Baotou Huazi Industry plunged 10 percent, the daily limit for most companies, to end at 12.17 yuan, while cement manufacturer Xishui Strong Year Co. also plummeted 10 percent to 17.54 yuan.

However, a statement late Thursday said "production and operations of Tomorrow Holding Ltd and its related companies are all normal".

Financier Xiao was last seen at his apartment in Hong Kong's harbourfront Four Seasons hotel, according to reports in the city this week.

He was taken by mainland security agents last week, according to overseas Chinese-language media.

Hong Kong police said that Xiao had crossed the border into mainland China last Friday.

Three statements purportedly from Xiao -- a Canadian citizen -- denying he has been kidnapped have appeared on his company's WeChat account and on the front page of a Hong Kong newspaper since he went missing.

Xiao's case has sparked new fears that freedoms in Hong Kong, a semi-autonomous city with a separate legal system from the mainland, are under threat from Beijing.

It is against Hong Kong law for mainland agents to operate in the territory. 

Hong Kong leadership hopeful Carrie Lam -- former government number two and considered Beijing's favourite to become the next chief executive -- said she had "every confidence" in the city's law enforcement agencies when asked how she would ensure residents remain safe in the wake of the disappearance.

Speaking to reporters after an election rally, Lam said one of her prime duties was to safeguard the rule of law.  

There has been no direct response to the abduction reports by any senior Hong Kong government official. 

When asked about the Xiao incident at a regular briefing, Beijing's foreign ministry spokesman Lu Kang said he was "not aware" of the situation.

Hong Kong's South China Morning Post said Xiao, the founder of Beijing-based Tomorrow Group, is in the mainland "assisting investigations" into the China stock market turmoil of 2015.

His wife Zhou Hongwen is now running his businesses, it said Friday.

Shanghai's composite index collapsed almost 40 percent in just two months in the summer of 2015.

The plunge came after authorities helped inflate a bubble in the market by encouraging investment, but when it burst officials sought to pin blame on market manipulators.

It is unclear how Xiao is being linked to the crisis, but mainland investigators have targeted several investment executives on suspicion of insider trading since 2015.