Japanese Fund Managers Warn Over Corporate Governance For Chinese Firms

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

30 April 2004

Hong Kong's stock exchange regulator has been urged to increase pressure on mainland firms to improve their corporate governance procedures, it emerged this week.

According to a South China Morning Post report, speaking at a meeting on Thursday attended by more than 150 Japanese fund managers, HKEx chief executive Paul Chow Man-yiu, and executives of six mainland enterprises, Tsuyoshi Shiba, fund manager with Sumitomo Mitsui Asset Management explained that:

"We would like to urge Hong Kong regulators to work closely with their mainland counterparts to protect our interests."

Mr Shiba went on to add that corporate governance is a growing concern, and that weak standards in this area could cause Japanese and other institiutional investors to impose risk premiums on Chinese firms when calculating the value of their shares.

"Many mainland companies do not [understand] their duties to disclose information," the SCMP quoted the fund manager as concluding.

Responding to the Japanese concerns, Mr Chow revealed that HKEx had introduced new listing rules and a code of corporate governance in a bid to raise standards.

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