HKEx to scrap newspaper notice rule
Requirement on announcements will end next year, says market regulator as it reports record profits for first half
Hong Kong Exchanges and Clearing (HKEx) by the end of next year will abolish its rule that listed companies publish announcements in newspapers as it pushes electronic distribution of information to match international practice.
'Hong Kong remains the only advanced stock market still to have the requirement for companies to buy newspaper advertisements to publish their announcements. This is very outdated and we have to change the rule,' exchange chief executive Paul Chow Man-yiu said yesterday.
The exchange's listing rules require the 901 main-board listed companies to buy advertising space in one English and one Chinese language newspaper for results announcements, changes of directors and company transactions. Listing candidates must publish initial public offering notices.
The exchange last year announced it would allow firms to issue summarised announcements in papers. Mr Chow did not give a timetable but an exchange source told the South China Morning Post the summary rules would be implemented in April and the rule dropped by the end of next year.
'It is the intention of the exchange to abolish the newspaper advertisements rule completely,' Mr Chow said. 'Some newspapers will be affected. The exchange, however, needs to consider that all other major stock markets have allowed companies to issue announcements electronically on [company and exchange] websites.
'This will save cost for companies and will bring the main board in line with the Growth Enterprise Market (GEM), which does not have the advertisement rules.'
He said GEM firms only needed to make announcements on their own and the exchange's websites.
Media analysts said key newspapers that might be affected by the rule change were the Hong Kong Economic Times (HKET), the flagship daily of recently listed Hong Kong Economic Times Holdings; Sing Tao News Corp's The Standard; and SCMP Group's South China Morning Post.
'Announcements account for 8 per cent to 10 per cent of group revenue of HKET. Half are the company announcements and the remainder are the listed candidate's initial public offering notices,' said a local brokerage analyst.
But he said the HKEx measures would cut papers' revenues by only 1 per cent to 2 per cent because many local companies saw published notices as the best way to reach shareholders.
Announcing HKEx's interim results, Mr Chow said it posted a record profit of $571 million, up 15 per cent year on year and the highest since its listing in June 2000. The result beat market expectations of about a 6 per cent increase.
A major growth driver was higher interest rates, which boosted investment income 66 per cent to $122 million. Most of the exchange's shareholder funds are invested in time deposits and bonds.
A higher number of listings and derivative warrants also increased listing fees 7 per cent year on year to $195.57 million.
Higher market turnover boosted trading fees 2 per cent to $352.61 million but this was offset by a 7 per cent drop in clearing fees.
Earnings per share were 54 cents and an interim dividend of 49 cents per share will be paid, making a payout ratio of 91 per cent.
Mr Chow said the exchange's performance would be affected by interest rates and market turnover.
'I have no crystal ball. But if interest rates continue to rise and market turnover remains high with current average daily turnover reaching $17.8 billion year-to-date and $23 million this month, it will benefit the exchange business,' Mr Chow said.
'This will save costs and bring the main board in line with the GEM'
Paul Chow Man-yiu
HKEx chief executive
