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Ping An Insurance denies tax evasion rumor

(Xinhua)
Updated: 2008-07-03 15:33

Ping An Insurance (Group) Co, China's second largest life insurer, on Thursday denied market talk of a government investigation into tax evasion.

The denial came after the rumor prompted panic selling of Ping An shares and drove the price down by the daily maximum of 10 percent on Wednesday.

In a statement to the Shanghai Stock Exchange on Thursday, the insurer said the taxation authorities were checking its tax records from 2004 to 2006.

It added: "The check-up is routine and unfinished, and the market talk is not the truth."

The stock plunge also came on speculation that Ping An would be required to write off huge paper losses from investment into the Belgium-Dutch financial institution Fortis, analysts said.

Ping An Insurance bought a 4.18 percent stake in Fortis for 1.81 billion euros in November. Fortis shares had fallen more than 45 percent since then.

The Chinese insurer also was planning to pay 75 million euros ($119.09 billion) to increase its stake in Fortis, in a bid to maintain its status as the biggest single shareholder.

Fortis planned to shore up its balance sheet by raising 8 billion euros, including issuing 150 million new shares at a price of 10 euros each.

Ping An shares plunged as much as 9.94 percent before closing 4.79 percent lower on Thursday morning.