China Urged To Tighten Corporate Governance To Attract Investors

by Mary Swire, for LawAndTax-News.com, Hong Kong

27 January 2005

Following the Chinese government's recent decision to reduce stamp duty on share transactions from 0.2% to 0.1%, analysts have suggested that toughening corporate governance and listing regulations would be more likely to reinvigorate bearish stock markets than tax breaks and cash injections.

Speaking to the Hong Kong Standard this week, Asia Pacific chief strategist with ING, Tim Condon explained that fears over the relatively lax corporate governance rules in China, and a lack of transparency have led many investors to seek access to the mainland market via Hong Kong's H shares and red chip investments.

"The problems (experienced by China's A- and B-share markets) are more deep-rooted than just lack of investors' interest," he observed.

Other investment experts have confirmed this, telling the newspaper that listing requirements on the Chinese mainland should be brought up to international standards, and listing candidates should be more rigorously vetted if investors are to be attracted by the Chinese market once again.

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