Oct 31, 2019 08:19 PM

10 Years of Caixin: Star Chinese Fund Manager Arrested After 2015 Market Rout

Photo: Caixin
Photo: Caixin

Editor’s note:

Since its founding 10 years ago, Caixin has been a witness to China’s social and economic transformation and has worked to uncover the stories and key people behind this process, which has required the persistent, professional pursuit of truth.

To mark our 10th anniversary, we are taking a look back at 10 of our most important original investigative reports, which led the way in Chinese media and uncovered the twists and turns of the country’s ongoing modernization.

These stories include the tale of a corrupt top security official, a barbarian at the gate, a fugitive tycoon, the industrial safety failures that led to more than 170 deaths in a series of fatal blasts and the environmental destruction wrought by the pursuit of economic growth at any cost. We will be publishing one story of the series each day through Nov. 11.

It was November 2015, just months after a spectacular crash had wiped out more than 40% of the value of China’s stock markets, reversing an equally explosive rally at the start of the year. Such sudden booms and busts are all too common in China partly due to rampant speculation, often by people illegally using insider information.

Authorities were looking for people to blame for the latest crash, and found a key culprit in Xu Xiang, a 39-year-old fund manager known to some as the Carl Icahn of China. Xu, whose detention was revealed in a report from the official Xinhua News Agency, had shot to fame and wealth as founder of Zexi Investment, a Shanghai-based asset management firm with 20 billion yuan ($2.8 billion) in assets under management.

After word emerged of Xu’s detention, Caixin reporters went to his Zexi headquarters in Shanghai to discover the place had already been sealed off. Caixin reporter Yue Yue said he made a similar discovery after hurrying over to Zexi’s Beijing branch office. “At that time nobody knew exactly what the situation was, not even people from the stock market regulator, because the case was being handled by the Ministry of Public Security,” Yue recalled.

In its first detailed report following the detention, Caixin took a deep dive into Xu’s background, starting with his move to Shanghai in 2005 from his hometown in the nearby city of Ningbo. Some of his funds would go on to post remarkable returns, including one that yielded 536% from 2011 to 2014, becoming one of the top performers among the nation’s 491 private funds during that period. But the real evidence would lie in the huge piles of trading data involving Xu’s company.

Yue and his team would go on to pore over piles of trading data in the following weeks and months in their quest to learn more about how Xu achieved his remarkable results. “We had to work with a huge amount of data,” Yue recalled. “It was necessary to compare the position data of various trading subjects from the past five years, including stock price trends, news reports, listed company announcements, background information of shareholders, and finally to analyze various PDF, Excel, Word and other documents, totaling nearly 5 gigabytes.”

Yue recalled the incredible tedium of reviewing so much data, especially because most of it had to be done manually without assistance from software that could have made the job quicker. But he ultimately came to a similar conclusion to that reached by a court in the coastal city of Qingdao.

In January 2017, that court would find Xu guilty of stock market manipulation, sentence him to five and a half years in prison and fine him 11 billion yuan — the most ever for an individual committing a financial crime in China.

To this day China’s stock market remains a haven for speculation, leading to a recurring game of cat-and-mouse as the regulator pursues people like Xu who are a primary reason why China’s stock markets still fail to command the respect they might otherwise deserve from global investors.

Contact reporter Yang Ge (

Read more about Caixin’s anniversary series:

10 Years of Caixin: Popping Anbang’s Bubble

10 Years of Caixin: How Failed Takeover of World’s Largest Developer Exposed Shabby Financial Regulation

10 Years of Caixin: Billionaire's Oil Empire Brought Down by Risky Financing

10 Years of Caixin: Mapping Zhou Yongkang’s Vast Web of Graft

10 Years of Caixin: The Army Logistician Who Lined His Own Pockets

10 Years of Caixin: Exposing Fugitive Tycoon Guo Wengui

10 Years of Caixin: Baidu’s Dangerous Ad Game

10 Years of Caixin: Tianjin’s Lethal Explosions

10 Years of Caixin: The Environmental Cost of Land Reclamation

You've accessed an article available only to subscribers
Share this article
Open WeChat and scan the QR code