HONG KONG - Thomas and Raymond Kwok, joint chairmen of Sun Hung KaiProperties, Asia's biggest developer, appeared briefly on Monday atHong Kong's anti-corruption agency to renew their bail as part of agraft investigation that has gripped the former British colony andsapped shareholder confidence in the conglomerate. Rafael Hui, a former head of Hong Kong's civil service, alsoreported to the Independent Commission Against Corruption(ICAC),leaving after a short stay. More than $7 billion (S$8.9 billion) has been wiped off thecompany's market value since the billionaire Kwok brothers werearrested in late-March. Their estranged brother Walter was arrested earlier this month,widening a probe that has also netted Thomas Chan, the board memberin charge of land purchases, and Hui, Hong Kong's chief secretaryfrom 2005 to 2007 and a friend of the Kwoks since childhood. Raymond Kwok arrived at the agency in the back of a black limousinewagon, looking stern. The cars of all three men were mobbed by TVcrews and photographers trying to catch a glimpse of those involvedin the ICAC's highest-profile case since its founding in 1974. All three renewed bail, said one source with direct knowledge ofthe proceedings. Chan and Walter Kwok were also expected to appearat the ICAC later on Monday. No charges have been laid by the ICAC, and shareholders say SunHung Kai, which owns the International Commerce Centre (ICC), thecity's tallest building and home to Morgan Stanley, Deutsche Bankand the Ritz Carlton, has lacked transparency over the probe. "The longer it goes on, the longer it drags on the stock, andpotentially wears on the business itself," said Tim Gibson, head ofproperty equities in Asia for Henderson Global Investors, a fundmanager that runs $800 million (S$1 billion) in Asia real estatestocks, including Sun Hung Kai. "It's a distraction we could do without." The scandal has raised questions about the close ties between theclubby tycoon-dominated economy and the government. The ICAC, which has said it is investigating suspected bribery andmisconduct in public office, has the option of extending bail,charging those arrested or letting them go with an option tore-arrest them at a later date. Sun Hung Kai, which counts Hong Kong telecom, bus and wastemanagement units as part of its empire, was worth $37 billion (S$47billion) before news of the March 29 arrests. The stock lost $5billion (S$6.37 billion) the next day and has continued to losesteam, sinking to a 7-month closing low on May 18. Sun Hung Kai shares were down 0.8 per cent on Monday,underperforming the benchmark Hang Seng index, which was up 0.3 percent. The three Kwok brothers have said they have done nothing wrong, andThomas and Raymond insist it's business as usual at the familyconglomerate. They have declined further comment, citing theinvestigation. "GROSSLY INADEQUATE" DISCLOSURE As the largest component of the FTSE EPRA/NAREIT Developed Asiaindex, Sun Hung Kai is a must-have for mutual funds tracked againstthat much-followed benchmark. The investigation overhang presents a tricky situation. Investors are unsure whether now is a good time to buy a stock thathas shed a fifth of its value, or whether they should sell acompany whose top executives are ensnared in a messy scandal thatmay play out over several years. The Kwoks are preparing for a 7-year legal fight, according to onesource familiar with their planning, who did not want to beidentified. One mutual fund investor said disclosure from Sun Hung Kai andinvestigators had been "grossly inadequate", adding the company haddone little other than set up an internal committee to handle theinvestigation. "Their actions to date haven't given minority shareholders a lot ofcomfort that they are dealing with it as seriously and aggressivelyas they could if it wasn't the family," said the investor, who didnot want to be named. Analysts' ratings on Sun Hung Kai stock have all been negativesince the arrests of the firm's co-chiefs. 'Strong Buy'and 'Buy'recommendations have dropped to 8 from 18 two months ago, and thenumber of 'Strong Sell' and 'Sell' notices has more than doubled to5. 'Hold' ratings have jumped to 10 from 4. Sun Hung Kai's net income is forecast to more than halve in theyear to end-June, to HK$21.13 billion (S$3.47 billion), accordingto a mean estimate on Thomson Reuters StarMine. Full-year resultsare due in September. FAMILY CONCERN Like most of Hong Kong's powerful property companies, Sun Hung Kairemains very much a family concern, raising the stakes if the Kwoksare unable to continue their duties. Shareholders should sell Sun Hung Kai stock into any short-termstrength, CLSA Asia-Pacific Markets advised in a trading note thismonth. The broker has an 'underperform' rating on the stock. Other landlords such as Wharf Holdings, Hang Lung Properties,Hongkong Land and Swire Properties stand to benefit if shareholderslose faith in Sun Hung Kai, mutual fund investors said. The company remains Asia's biggest property developer - but onlyjust. Rival Cheung Kong (Holdings) is valued at $28 billion (S$36billion), and Australia's Westfield Group at $21 billion (S$27billion). Globally, Sun Hung Kai trails only U.S. shopping mall developerSimon Property Group by market value. We are high quality suppliers, our products such as Handmade Glass Christmas Ornaments Manufacturer , Hand Blown Glass Goblets for oversee buyer. To know more, please visits Glass Piercing Jewelry.
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