10 things to watch out for when...When evaluating companies

Blue chips: There is never a guarantee that a company you want to invest in will survive the turmoils of an economic crisis. But fund managers and strategists suggest you take the safe route to investing by picking a blue-chip company.

Board: Start by looking for a high-quality board of directors. Top institutional investors want a substantial majority of the board to be independent. Unfortunately, in Hong Kong a number of companies have their relatives and friends as board members.

Diverse skills: Check if the company has a board of directors who have diverse backgrounds and skills, directors with fewer commitments to other boards and annual elections. In short, directors who are dedicated to improving the business of the company.

Financial statements: The details contained in a balance sheet are the best indicator of how transparent the company's management is. The most forthright companies provide depth with their earnings releases. Some companies, for example, include a balance sheet, cash flow statement and segment results with the release of their financial figures.

Charges: Check the track record on one-time charges. Accounting rules say they must be for unusual and infrequent events. If they are not, it's a red flag. A number of companies in Hong Kong are required to report extraordinary charges in their balance sheets.

Earnings: Hong Kong companies are not yet required to announce their quarterly results. But if you are investing in a United States or European company and if the company meets or barely beats earnings expectations quarter after quarter, don't be thrilled - be suspicious.