The 5.7% fall in Sinopec's Shanghai-listed shares to 13.47 yuan ($1.77) each on June 25 helped push the benchmark Shanghai Composite Index down 3.7%, as speculation widened over the cause of the departure of Chen Tonghai.

Sinopec's Hong Kong-listed shares fell 2.9% to HK$8.79 (US$1.12) on the day, while its American depositary shares, which are listed on the New York Stock Exchange, were down 2.37%.

Sinopec, China's biggest oil refiner, declined to elaborate on a statement saying that Mr. Chen had resigned for "personal reasons." Mr. Chen, who had been Sinopec's chairman since 2003, also left his position as head of Sinopec's state-owned parent company, China Petrochemical Corp.

Sinopec said it will hold a shareholders' meeting in August to approve the nomination of Su Shulin to succeed Mr. Chen as chairman. The 45-year-old Mr. Su is a former senior executive at rival national oil company PetroChina Co. He was appointed last November to a government position in Liaoning province.

Leaders of China's top state-owned companies are all appointed by the government. Outside investors generally have no say in such decisions.

Bradley Way, a Beijing-based analyst with BNP Paribas, said the Sinopec incident shows the risks of investing in companies that are subject to government policy or high-level management changes imposed from above. "Investors have forgotten that they take risks when investing in Sinopec that are above and beyond that of other oil companies," Mr. Way said.

Mr. Chen, 58, is credited with helping transform Sinopec. Since he took the helm in 2003, Sinopec's profit has more than doubled. Last year, net income jumped 30% to a record 54.9 billion yuan, according to regulatory filings by Sinopec in Hong Kong.

The announcement of Mr. Chen's resignation surprised many in the industry. The Sinopec chairman has been a leading advocate of easing government controls on fuel prices in China. Goldman Sachs said Mr. Chen's departure, two years before his expected retirement date, could slow the pace of fuel-price restructuring and hurt the company's expansion plans.

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