• Wed
  • Dec 24, 2014
  • Updated: 6:43am
Lai See
PUBLISHED : Friday, 08 August, 2014, 4:28am
UPDATED : Friday, 08 August, 2014, 4:28am

HKEx still feels the pain of losing Alibaba to the United States

BIO

Howard Winn has been with the South China Morning Post for two and half years after previous stints as business editor and deputy editor of The Standard, and business editor of Asia Times. His writing has also been published in the Far Eastern Economic Review, the Wall Street Journal, and the International Herald Tribune. He writes the Lai See column which focuses on the lighter side of business.
 

Looking at HKEx's interim results we were struck by a paragraph in the chairman's statement which said, "We never lose sight of our responsibilities as an exchange controller, a regulator as well as a listed company". Although chairman Chow Chung-kong says he never loses sight of this triple responsibility, one thing he doesn't seem to see is the conflict of interest that is inherent in this arrangement.

As a listed company HKEx is duty-bound to maximise profits for its shareholders. The executives and management are incentivised to work to this end, hence their juicy bonuses. But as regulator it is not focused on maximising profits but is, or should be, more concerned with running a fair and orderly market and maintaining high listing standards. It's not hard to see the conflict here.

Indeed this dilemma was nicely encapsulated by the debate over whether or not Alibaba should be listed in Hong Kong. The pain at the exchange for having let such a milch cow slip through their fingers was palpable. They were at a number of meetings to try and get round the vexed issue of Alibaba's dual-class shares. In one of his blogs HKEx chief executive Charles Li Xiaojia observed that one share, one vote, has a nice ring to it and, "if we only care about reputation, this approach will certainly help to maintain Hong Kong's nominal regularity purity". But this position has a price. "If this becomes a trend, Hong Kong could lose a huge franchise for good," referring to the possible loss of new China listings to the US exchanges.

But Chow's recent chairman's statement gave no inkling as to how this problem was to be resolved. He simply says, "Therefore, we will continue to review our regulatory regime with a view towards upholding market quality, and we will explore further collaboration with our stakeholders to drive sustainable performance in the economic, social and environmental dimensions of our industry." Clearly this issue has not gone away.

 

Chainrai sues for HK$66.7m

There seems to have been a falling-out between Hong Kong businessman Balram Chainrai and his erstwhile partner Levi Kushnir. The two bought English football club Portsmouth after it came out of administration in August 2010. But Chainrai has recently taken out a writ in Hong Kong's High Court in which he is demanding 29.5 million Israeli new shekels (HK$66.7 million) from Kushnir, together with Kushnir Family Holdings, Israel Sorin Shochat, and Yaacov Liraz, all of whom are based in Israel. The suit relates to loan agreements between Chainrai and Kushnir Family Holdings between June 2005 and February 2006 which the writ says were guaranteed by Levi Kushnir. Vaacov Liraz acted as a legal adviser to Chainrai during this period. The writ alleges conduct amounting to breach of contract, negligence, breach of fiduciary duties, collusion or conspiracies to defraud Chainrai and breach of professional codes of conduct.

 

Jobs galore

Demand for professionals in Asia remains brisk according to headhunters Robert Walters. Its Asia Job Index tracks advertisements for professionals. These grew 28 per cent in the first half of the year compared with the same period last year. In Hong Kong job adverts for legal and compliance professionals rose 33 per cent as a result of the continued tightening of the regulatory environment. This also created demand for accounting and finance professionals, with advert volumes up 29 per cent. Companies are apparently devoting more time and effort to retaining staff as the economy stabilises, and therefore adverts for human resources roles increased 25 per cent.

 

Have you got any stories that Lai See should know about? E-mail them to howard.winn@scmp.com
 

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This article is now closed to comments

cleareye
"The pain at the exchange for having let such a milch cow slip through their fingers was palpable." Having lost something you have may cause pain, while losing a potential only yield disappointment. The shareholders are entitled to maximum profit, but more over, strategic management both for the short term ans long term. If HKSE is identical to all other bourses, what is the purpose of its existence? It is the choice that HKSE gives to the market that entice investors who have no appetite for dual class shares. We have witnessed too much corporate failures to give up shareholders' rights to protect our investments.
 
 
 
 
 

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