(Updates with police comment, analyst comment, share price)
HONG KONG, Aug 31 (Reuters) - Hong Kong police have arrested
the chairman of one of China's largest property developers,
Agile Property Holdings, in connection with a case of
alleged indecent assault, the firm said on Friday.
Chen Zhuo Lin, known as Chan in Cantonese, was arrested on
Thursday, Agile said in a filing to the Hong Kong stock
exchange. The arrest comes at a time when Chinese property
companies are under pressure from government efforts to make
housing more affordable in the world's second-largest economy.
A 50-year-old man named Chan made a statement at Wan Chai
police station on Thursday after which he was arrested, and must
report back to police in October, the police told Reuters in an
email. The crime squad is still investigating the case.
Chen, who not been charged, has been released on bail. Agile
said the arrest "has not affected and will not affect the normal
business and operations of the group."
Investors punished Agile stock, which was the biggest faller
among Hong Kong-listed real estate companies on Friday.
It was down 4.8 percent 15 minutes before the close of
trade, when the Hang Seng Properties and Construction Index
was up 0.02 percent.
"In our view, the arrest has not only hurt the company's
reputation by a certain extent, but may also affect the
company's future strategic development," Deutsche Bank analyst
Jacphanie Cheung wrote in a note.
Chen's four brothers all work for the company, but Chen has
been the key man in charge of land purchase negotiations.
Deutsche Bank said the company's bonds would be weighed down
by the investigation, while J.P. Morgan said the arrest would
dent the company's reputation but not its operations.
COMPANY FOUNDER
Hong Kong police confirmed in an email to Reuters that a
28-year-old woman claimed to have been assaulted on July 10 by
Chen, at a unit on Purves Road.
Chen owns a home on Purves Road in the luxury district of
Jardine's Lookout, which overlooks Happy Valley racecourse,
local media reported.
The Chinese-language press has reported that a personal
assistant of Chen's had levelled the accusations. When contacted
by Reuters about the alleged assault prior to and after Chen's
arrest, the company did not respond.
Chen, who founded the company, earned a salary of 3.7
million yuan last year from Agile, according to a Thomson
Reuters database. As is the case at many listed Chinese
developers, the company patriarch controls the bulk of the
stock. His family trust, Top Coast Investment, owns 63 percent
of the company's shares.
Mainland home builders have found it increasingly tough to
borrow money after Beijing has legislated to curb property
speculation and limit the runaway gains in house prices.
That has meant restrictions on how many properties Chinese
people can buy, crimping sales for developers which rely on
advance purchases to fund existing projects.
Agile has $3 billion in debt and a stock-market value of $4
billion.
It posted property sales of 31.5 billion yuan ($5.0 billion)
in 2011, ranking it ninth among listed Chinese developers.
($1 = 6.3496 Chinese yuan)
(Reporting by Alex Frew McMillan, Joy Leung and Umesh Desai;
Editing by Daniel Magnowski)
