HONG KONG -- Shares of Brilliance China jumped nearly four percent on Tuesday after the company said ousted chairman Yang Rong had sold off his entire holdings in China's largest minibus maker.
Analysts said the move could foreshadow the beleaguered director's eventual exit from the firm, which would remove a cloud which has been hanging over the company and rattling investors for months.
The London-based Financial Times reported on June 4 that Yang, ranked by Forbes as China's third richest businessman, and five senior executives were being questioned by Chinese authorities over alleged asset stripping.
Brilliance has repeatedly denied reports that Yang was being investigated, but stunned the market last month by removing him from his posts as chairman, chief executive officer and president. The company said Yang's goals and views were no longer in line with those of shareholders, but did not elaborate.
Yang, a former central bank official, was one of the engineers behind Brilliance's successful listing in New York in 1992 at a time when many Chinese officials were still suspicious of stock markets.
A spokeswoman for the company told Reuters on Tuesday that the sale of 79 million shares was "Yang's own decision".
It was not clear when he sold the shares or at what price, but based on Friday's close of HK$1.06 Yang would have pocketed HK$83.7 million ($10.7 million).
Company watchers said the move was likely an effort by both parties to delineate a clear line between Yang and the new management team, which has put a high priority on diversifying into the luxury car and mid-priced sedan markets.
Brilliance shares closed 3.77 percent higher at HK$1.10, off a high of HK$1.12, as analysts said the sale had helped dispel some of the uncertainty which has plagued the stock.
Through Friday's close, Brilliance shares had lost nearly 21 percent of their value in the last month and more than 18 percent in the last three months.
Besides the reports about Yang, investors have also sweated over the slow progress of a planned joint venture with Germany's luxury car maker BMW and fierce competition in China's auto sector, which is eroding profit margins.
"It (the stake sale) is positive for sentiment as the uncertainty of Yang's prospect as a shareholder has been removed and the management can now focus on the BMW joint venture and the launch of its Zhonghua sedans," said Helen Wang, an analyst at SG Securities.
Analysts said there could now be added pressure for Yang to quit the board of directors, although that would not necessarily push forward the deal with BMW.
"I can't see any direct relationship, (Yang) owned only about two percent of the shares, and that's not a significant amount," said Alice Hui, analyst at DBS Vickers.
Brilliance China and BMW said last week that they had yet to receive a formal approval from the Chinese government on their joint venture, which the Chinese firm is counting on to propel it into the high-margin market. Both firms have been waiting for over a year for government approvals.
Brilliance will launch its Zhonghua sedan next month. It says interest in the sleek new model is keen but it will be entering a tough market crowded with cars from the country's top car maker First Auto, as well as with foreign cars like GM's Buick Regal and Volkswagen's Jetta and Passat.
The Brilliance spokeswoman declined to elaborate on Yang's future plans but said he held no indirect stakes in the firm, which has drawn flak from investors for its murky shareholding structure.
Yang is the founder of the "non-government and non-profit" Chinese Financial Education Development Foundation, which controls 39.45 percent of the firm.