SCMP: Informative Read
Rules urged to bring quarter-time scores
Saturday, April 28, 2001
ENOCH YIU
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Regulators are considering a change in listing rules that would make it necessary for main board companies to announce results on a quarterly basis, in a bid to improve transparency and corporate governance.
Hong Kong Exchanges and Clearing (HKEx) chief executive Kwong Ki-chi said the move would also bring the main board in line with key international stock markets.
The more than 750 main board companies are now required to report results every six months. Growth Enterprise Market firms already report on a quarterly basis.
HKEx and the Securities and Futures Commission have been under pressure to make the move since the China Securities Regulatory Commission the mainland's securities watchdog two weeks ago announced that all 1,100 listed mainland companies would need to make quarterly financial reports from next year.
Mainland listed companies are now required to disclose results every six months.
Brokers said if Hong Kong did not follow China's move, it would reduce the SAR's competitiveness.
However, Mr Kwong said HKEx and the SFC would study such a move carefully because of the higher corporate operating costs that would result.
He said HKEx would look at what kind of information companies would need to disclose on a quarterly basis.
''We need to study if it should only be the profit and loss account, or [whether] it should include the balance sheet figures or audited report,'' Mr Kwong said.
Mr Kwong and chairman Charles Lee Yeh-kwong yesterday held the first annual general meeting of the merged exchange. Mr Lee said a focus of HKEx in the next 12 months would be to encourage more Chinese companies to list in the SAR.
An HKEx liaison office in Beijing would open in the next few months, he said.
Although China is reforming its stock markets, Mr Lee was not worried that the Shanghai and Shenzhen stock exchanges would become a threat to HKEx.
''The exchanges in Hong Kong and China are performing different roles,'' he said.
The mainland stock markets could only raise yuan for Chinese companies, while HKEx could raise Hong Kong dollars and United States dollars for them.
The exchange this year is expected to see lower income, with first quarter turnover almost 50 per cent lower than a year ago.
The number of listed companies has fallen due to weak market sentiment. According to the HKEx monthly report, released yesterday, 47 candidates have scrapped their listing plans this year after receiving approval from the exchange.
The low turnover will reduce the income from the transaction levy paid by investors on each stock transaction, while fewer new listings will affect income from listing fees paid to HKEx.
Mr Kwong said the exchange would solve the problem by launching more services and products.
HKEx is launching two index funds on Wednesday, and the MSCI China Free Index Futures on May 7.
Mr Kwong said the HKEx would soon introduce centralised back-office services for brokers, which would help them cut costs.
He said the exchange had completed consultation on the issue and had received about 20 responses on how it should launch the services.
HKEx centralised back-office services would allow brokers to outsource functions such as billing, the handling of clients' records and the delivery of share certificates.
Mr Kwong said the new service would allow brokers to cut staff and enhance cost-cutting measures.
" Success seems to be largely a matter of hanging on after others have let go." ~ William Feather
