Hong Kong Stock Market Reforms On Hold For At Least Two Years

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

16 June 2003

According to reports in the Hong Kong media last week, planned stock market reforms are likely to be postponed until at least 2005 in order to allow for extensive consultation.

Citing a government paper sent to legislators prior to a meeting on Friday to discuss the controversial reforms, the South China Morning Post revealed that public consultation on the reforms is set to take place in the third or fourth quarter of this year, meaning that any proposed changes to the law will likely not be submitted until the end of 2004.

The initial report, compiled by a government-appointed group of experts, proposed that the Securities and Futures Commission should take over the frontline regulatory role of Hong Kong Exchanges and Clearing (HKEx). It was endorsed by Financial Secretary, Antony Leung Kam-chung within hours of its release, but following objections from HKEx, he announced in April that there would be a consultation period.

Speaking to the SCMP, lawmakers and observers suggested that the government had gone from one extreme to the other.

'We think there should be consultation,' Chan Kam-lam, economic affairs spokesman for the Democratic Alliance for Betterment of Hong Kong observed, continuing: 'However, the government's proposed timetable is far too slow. The reform should be completed within a year.'

Patrick Yeung Kai-cheung, of CPA Australia's Hong Kong and China division agreed, explaining to the business daily that:

'The government should either say 'yes' or 'no' on the reform. It would create a lot of uncertainties while it said there would be changes in the market structure but then nothing happens for two years.'

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