There is 0 about Hong Kong’s inventory regime that needs fixing. Key opponents to a city’s due regulatory reforms have been singing this line in roughly any press talk and open forum.
Is is true? Money Matters took a demeanour during all a 91 companies listed on a categorical house in 2014 and their life after listing. That is a many distinguished year for both a Hong Kong Exchange as good as sponsors given a record-making series of listing.
The outcome is not comforting during all.
Of them, 12 sole a determining seductiveness within 18 months of listing. Since a manners concede a change in control usually after a year of listing, it would be satisfactory to contend that many of them have been listed especially to be sole for a large benefit of no reduction than HK$600 million each.
A classical instance is Magnum Entertainment that was listed to lift income to reconstruct a 3 nightclubs. On a anniversary of a listing, Magnum’s owners sole a control to a mainland air-conditioning manufacturer. The latter sealed down a clubs after a few months of their re-opening, claiming bad business.
This series depends usually a cases of central change in control though not those that saw a change in chairman, executive directors, arch financial officers as good as auditors.
Some of a 91 have depressed into a twilight zone. Eighteen issuers saw their trade reduced to a immaterial turn within a brief duration of time after listing. Among them are sourroundings services provider Baguio Green and automobile play Subfonda, that have seen 0 trade for a enlarged time.
It would not be too startling to see many of them eventually being sole to mainland firms that found a A share inventory reserve too long.
A good contrariety to these 0 traders are a active trade of 4 issuers, whose open floats were fast sucked adult by a handful of investors after some fantastic initial opening within months of their listing, justifying a warning from a Securities and Future Commission (SFC).
Then there are 4 cases of enlarged suspension. Retailer Nuoqi’s authority left within 6 months of a listing. Tianhe Chemical has nonetheless to purify adult comment queries by short-sellers. Children’s wardrobe manufacturer Miko International has unsuccessful to yield any comment papers to a auditor for a initial post-IPO audit. Paper manufacturer Changgang Dunxin was dangling over vague anomaly of a shares.
That adds adult to 38 cases, or 41 per cent, that can frequency be tangible as peculiarity listings. If one excludes a 14 state-owned enterprises or issuers from heavily regulated industries that acted small plea to any regulator; a commission goes adult to 49 per cent.
Members of a Listing Committee that now do a vetting will disagree that it is not their pursuit to collect winners, usually to make certain all a risks are entirely disclosed to investors. In short, customer beware.
But that is satisfactory usually if one can review a poisonous warning tag on a jar.
The handbill for Bank of Jinzhou, that warranted a distinction of 2.1 billion yuan in 2014, pronounced a 9.4 billion yuan loan to a “listed company” was branch doubtful. It did not divulge that a “listed company” was in fact Hanergy Thin Film Power, that is underneath review by a SFC and has had a trade suspended.
The handbill for Hang Fat Ginseng pronounced “it was not theme to a regulations” of mainland China in a trade of Ginseng since they sole to mainland-based customers; all such exchange were finished in Hong Kong and all formalities were rubbed by a customers.
Yet, it did not divulge that Hang Fat’s sales to China over a years exceeded a volume of protected imports available by China. So how did Hang Fat’s ginseng get in?
This list of such cases goes on and on.
What a numbers and cases illustrate is that a stream inventory regime is not as good as some proclaim. Whether a due remodel to give a SFC an progressing and bigger contend is a right medicine can be theme to debate.
However, a standing quo is not right.