Shares in South Korea's Hyundai Motor Co. fell as much as 3.4 per cent yesterday after the auto maker's chairman, Chung Mong-koo, was arrested last week on charges of misusing company funds.
Friday's arrest has triggered fears of a management vacuum at the conglomerate at a time when a surging won currency threatens to dent profits at its affiliates and also disrupt overseas expansion plans.
But shares came off their lows, with analysts expecting an eventual rebound, despite the uncertainty surrounding Mr Chung.
A fund manager at a foreign asset management company, who declined to be named, said even if Mr Chung was found guilty the repercussions could be limited and he was unlikely to spend long in jail.
"Sooner than people think, we'll see the end of it. Just as in other cases involving top executives in Korea, these people come out (of jail) fairly quickly," said the fund manager.
"It's part of the game in politics," he added.
Shares in Hyundai Motor, the world's seventh-biggest car maker, fell 4.7 per cent over the past two sessions, wiping out close to $1 billion off its market value.
The investigation, which culminated with Mr Chung's arrest on Friday, has homed in on alleged slush funds created within the group.
The probe has also touched on how the country's sprawling family-run conglomerates, or chaebol, shift money within group companies, using complex share ownership networks to control their businesses.
Hyundai Motor has delayed reporting its first-quarter earnings, due out last week, further adding to uncertainty regarding the stock.
The auto maker yesterday said April sales rose 2.5 per cent to 215.037 vehicles from a year earlier.
Hyundai shares fell 1.93 per cent to 81,300 by 4:21 a.m. British time, compared with a 0.34 per cent gain in the main KOSPI index.
Other affiliates of the Hyundai Motor Group also continued their recent slide, with Kia Motors Corp., the country's second-biggest auto maker down 3.87 per cent to 18,650 won and auto parts maker Hyundai Mobis falling 4.2 per cent to 79,800 won.