Shanghai real estate industry lost billions of dollars following the detention of Future Land Development Holdings Founder Wang Zhenhua over suspicions of child molestation.
Zhenhua was detained earlier this week in a Shanghai hotel after suspicions of harassing two minors.
Meanwhile, Future Land, or better known as Seazen Holdings, published on Friday an apology letter for the alleged victim and her family.
"We are deeply troubled, shocked and upset about the fact that it is our company's founder who caused this storm. We, as well as the public, think juveniles are the future of society, and any behavior that harms them should be punished by the law." Seazen Holdings wrote.
Futures Land officials said during a Wednesday's trading session that it had ruled out Zhenhua as chairman.
The company's shares dropped today by 36 percent on the Hong Kong stock exchange, while Zhenhua's S-Enjoy Service Group fell around 41 percent over the same course of time.
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Future Land stock price chart[/caption]
According to data released by Refinitiv, the issue caused about $ 5.4 billion to be wiped off the value of the three companies.
Credit rating agencies noted that the chairman's arrest could damage the real estate's reputation and position with partners, and potential investors.
"In our view, the seriousness of the allegation and sudden change in leadership could have severe repercussions for Future Land's reputation and brand name," S&P Global Ratings said in a comment.
In addition, Goldman Sachs analysts cut their target prices for Future Land, indicating risks related to the suspension of the real estate tycoon, and replacing him with his son, Wang Xiaosong.
According to the Bloomberg Billionaires Index, Zhenhua fortune has shrunk $1.5 billion, reporting around $5 billion.
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