Wall Street China has become a terrifying place

Wall Street China has become a terrifying place.

The anti-corruption probe that has been sweeping China industry by industry for two years has finally reached the country’s financial sector — just as the government official in charge of the graft probe, Wang Qishan, said it would in October.

Most recently, an honorary chairman and a director of Beijing’s Financial Street Holding Co., a $US27 billion real estate and investment firm, have been placed under investigation, according to local press reports.

At the beginning of November ‘China’s Carl Icahn’, activist investor Xu Xiang was arrested on suspicions of “insider trading and other offenses,” according to a statement from the government’s Xinhua News Agency.

Xu’s fund, Zexi Fund No. 1 gained 323% for the year up to his arrest, while the Shanghai Composite has risen only 3% for the year, according to the New York Times.

Around the same time, officials detained Zhang Yun, the President of China’s third largest bank, the Agricultural Bank of China, according to CNN. Both Xu and Zhang’s arrests demonstrate that there’s no financier too powerful to avoid the probe.

Better watch out

China’s President Xi Jinping announced a wide reaching corruption campaign around two years ago, and promised to take down both “powerful tigers” and “lowly flies.”

Since then, some rich Chinese have tried to limit ostentatious shows of wealth because Xi kept his promise. His probe has ensnared thousands, ranging from local officials taking bribes to the most powerful government officials.

The anti-corruption drive also targeted specific industries and branches of the government. The government began its work on State Owned Enterprises (SOEs) last year. It’s also started probing the military.

So Wall Street China had to know its day was coming, especially after two complete stock market meltdowns this summer — one in June and another in August — that ended mainland indices’ year-plus long 150% rally.

After the June disaster the official in charge of IPOs and new share offerings was taken into custody, according to Xinhua.

“She’s suspected of breaking the law by taking advantage of her position,” said a statement by the China Securities Regulatory Commission posted on Weibo.

“Once we discover such violations, we will immediately take action to punish them. We do not take this lightly.”

After the second crash, a prominent hedge fund manager made headlines when she disappeared for a few days. It turned out that officials had taken Man Group’s Li Yifei into custody to “assist” with investigations into market manipulation.

Around the same time, China’s CCTV aired the confession of a Chinese business journalist at magazine Caixin. Wang Xiaolu admitted to causing instability in the market by getting information “through private channels” and then adding his “own subjective judgment” to his reporting.

NOW WATCH: SeaWorld is ending its killer whale show after being criticised for how it treats them

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.