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Cathy Holcombe

Why don't companies just report their results every two or three years?

That way they can get on with the grander goals of running their businesses without being bothered by shareholders.

Indeed, this idea was put across by a man who buys shares for a living, Value Partners fund manager Norman Ho. It is possible Mr Ho was being sarcastic.

He was offering a retort to an argument put forth by some Hong Kong companies against quarterly reporting.

These companies say it will promote 'short-termism'.

Swire Pacific and CLP Holdings are among those which brought up this concern amid calls for Hong Kong to upgrade its half-yearly reporting requirement.

They say top managers will be spending too much time on accounts and not enough on building strategies for the long-term betterment of the company.

Investec Asset Management Asia chief investment officer Robert Conlon is another who does not buy that argument.

'I think management accounts are available monthly. It's good enough for them to know what they are doing on a monthly basis but we have to wait six months and guess it with a three-month delay. That's not fair,' he said.

Taiwan's technology companies provide monthly sales figures, and Taiwan and South Korea report on a quarterly basis.

Mr Conlon said they used information from Taiwan and Korea as a proxy for measuring the health of Hong Kong's technology companies.

'It would be much better to have that clarified,' he said.

This year China began requiring first-quarter reporting and as a result, investors in Hong Kong got quarterly updates for the H-share firms which also have A-share listings. (The rest of the Hong Kong-listed mainland firms follow Hong Kong rules and thus need not provide the additional reporting requirements.)

Of the 25 H-share firms that reported, 16 announced annual growth in net profits. Six were hit with falling profits, giving analysts an insight into pressure facing petrochemical and glass companies.

In a round-up of the results, Core Pacific-Yamaichi also put in a good word for quarterly reporting. '[Mainland] companies must improve their management accounting system to meet the quarterly reporting requirement, which will have long-term benefits for corporate management.

'In the long term, the practice will definitely improve the credibility of H shares.'

But there is another angle and one that may explain the Hong Kong Exchanges and Clearing's push for quarterly reports.

For brokers and stock exchanges, it is good for business.

After releasing results late last month, volume spikes were seen in companies such as China Eastern Airlines Corp and Huaneng Power International.

Big price moves were also apparent. Shenzhen Expressway rose 30.64 per cent within a week of reporting on April 29.

In the week after their respective results, China Eastern rose 6.72 per cent, Jiangsu Expressway 7.14 per cent and Yanzhou Coal Mining 4.5 per cent, while Angang New Steel fell 6.14 per cent, Jiangxi Copper slid 4.38 per cent and Nanjing Panda Electronics dived 16.19 per cent.

Quarterly reporting increases share trading volumes and volatility. Declining turnover and volatility are two of the biggest burdens for Hong Kong's market. Anything that can boost these areas is worth it.



Timely accounts push trade