Denials unconvincing

The political fallout from last week's crash of penny stocks is taking on a life of its own.

With investors baying for blood, a witch-hunt is underway. Hong Kong Exchanges and Clearing chief executive Kwong Ki-chi, as the man responsible for putting together the consultation paper on delisting, no doubt bears a major part of the responsibility for failing to anticipate market reaction. The proposal to delist stocks which trade below 50 cents for an extended period of time led to their panic disposal by nervous investors on Friday, with some shares plunging by almost 90 per cent.

What is interesting is that Mr Kwong appeared to have tried to direct the focus of the public backlash to himself by saying the stock exchange's board of directors and the government had not been consulted on the details of the proposals before they were announced.

Meanwhile, both Financial Secretary Antony Leung Kam-chung and Secretary for Financial Services and the Treasury Frederick Ma Si-hang said the government was not aware of the details of the proposals. The Securities and Futures Commission was definitely consulted, but its chairman Andrew Sheng has not been saying much in public.

In a clear attempt to stay clear of the row, Mr Ma even declined to shake hands with HKEx chairman Charles Lee Yeh-kwong on Sunday after a press conference announcing the withdrawal of the delisting proposal. 'This is no time for shaking hands,' said Mr Ma.

Yet, it seems unthinkable that the exchange's board of directors had not been briefed on the proposals, which touched on key issues facing the exchange, before they were unveiled for public consultation. Mr Leung and Mr Ma may not have been formally given a copy of the consultation paper beforehand. But unless they and their colleagues did not read the papers, which widely reported the proposals before their formal announcement on Thursday, their claims that they were not aware of the proposals sound incredible.

Accountability being the buzz word nowadays, Mr Kwong looks set to be made to bear the full blame for the fiasco. And he knows it. When his term as head of the exchange expires later this year, no one should be surprised that he will go. Behaving as a good boy, he is trying to stop the fallout from pulling other people down; hence his incredible statements that the exchange's board of directors and the government were not in the know.