Between a dubious decision by our market regulator and talk of sedition, are Hong Kong freedoms under threat?
Philip Bowring warns of the insidious erosion of Hong Kong’s freedom of speech, as can be seen in two separate incidents – an SFC ruling, and talk of sedition charges against advocates of independence
Freedom of speech and belief are the most fundamental supports of other freedoms. If in doubt about that, just ask a Saudi Arabian or North Korean. But there are plenty of lesser threats than those two extreme examples, as money, ideology and plain ignorance erode freedom at the edges.
Blurring the line: How Hong Kong’s securities regulator is choking freedom of speech
The errors in the report were minor and technical while the substance of the red flags was proven justified. Of the six companies identified as “negative outliers”, four have since defaulted on their debts and/or filed for bankruptcy and two massively underperformed. That is an impressive record by Moody’s, a firm more often accused of being too favourable to debt issuers.
The bottom line is that honest, hard-nosed criticism of listed companies is endangered
The SFC apparently views negative comments on companies as improper, however well supported by data. Meanwhile, any amount of salesman’s bull talk based on nothing more than pie-in-the-sky analyst fantasies is pumped out by the financial intermediaries the SFC licences.
Indeed, the SFC should know that well, given that a member of the three-person tribunal who made the Moody’s judgment was Ding Chen, head of mainland-based CSOP Asset Management. She was, notes Webb, making bullish comments on mainland stocks at the height of the 2015 bubble. An outsider might wonder whether this was based on analysis and data or the interest of her company in selling exchange-traded funds. Another member was an associate professor from Baptist University who sits on a multitude of government yes-minister bodies. The chairman was Mr Justice Michael Hartmann, a lifelong member of a profession not known for financial expertise or competition.
The bottom line is that honest, hard-nosed criticism of listed companies is endangered. Meanwhile, self-serving investment banks, brokers and fund managers can get away with any amount of nonsense about corporate and market prospects. Of course, licensed intermediaries have a responsibility to be diligent and write honestly. But the SFC clearly has a grossly lopsided version of the scales of justice.
