The Hong Kong Securities Professionals Association has proposed that the stock exchange introduce a system to alert investors about poorly performing companies. The association, a brokerage industry body, made the proposal in a letter to Hong Kong Exchanges and Clearing (HKEx) yesterday. The association said it opposed HKEx introducing delisting criteria but said it should introduce a warning system. It urged the exchange to add a signal to the trading screen of particular stocks to remind investors about trading risks. It said five types of companies should be labelled with such a warning: those that suffered losses for three years; those with too high or too low a turnover; those with a market capitalisation below HK$10 million for 30 consecutive days; companies in negative equity; and those with assets that have dropped by 50 per cent or more in a year. 'The alarm system would help investors understand the risks of trading these companies. It is better than delisting them,' the association said. It also said it wanted the exchange to force companies trading below one HK cent to consolidate their shares to a level above that. This was to increase transparency as the current trading system could not handle trades below one cent. The association's suggestions are also aimed at helping the HKEx rewrite its delisting consultation paper to be issued at the end of this month. The exchange was forced to hold back a consultation paper in July after investors rushed to dump low-priced stocks. In the paper issued on July 25, HKEx suggested 11 delisting criteria for poorly performing companies, including a controversial rule to delist companies trading below 50 HK cents for 30 days which failed to consolidate their shares within a year.