bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

urlAlias

moreOnThisArticles

sponsorType

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Enoch Yiu

Two-step plan will first see listed firms release financial highlights
The stock exchange will proceed with a controversial plan to make companies report earnings every three months instead of twice a year, shrugging off stiff opposition from some of the city's biggest companies.
A regulatory source said quarterly reporting was expected to be in place by 2011 but to appease critics, who complain the move will boost costs, it would be introduced in stages.
The plan has drawn fire from corporate heavyweights including HSBC, CLP Holdings, Cheung Kong (Holdings) and Air China, which say it will not only be more costly but make investors focus on short-term profit.
Hong Kong Exchanges and Clearing says quarterly reporting will boost transparency and give shareholders more timely information on a company's financial performance.
Hong Kong is one of the world's few major markets yet to demand companies release information each quarter. The US, Australia, Singapore and the mainland all have quarterly reporting, while Britain introduced a three-month update rule last year.
To blunt criticism of the plan, the exchange is expected to first introduce the less onerous British model as early as this year - allowing the release of performance highlights  rather than a full set of earnings figures.
This will require all main-board-listed companies to give management highlights, updating their major sales or business development trends. The exchange will then introduce full quarterly financial reporting in either 2010 or 2011.
The source said the exchange, which had completed industry consultation on the issue, was likely to finalise the plan this week and would submit it to the Securities and Futures Commission for approval.
Quarterly reporting has the support of many in the city's financial community, including fund managers, institutional investors and analysts who are increasingly demanding higher transparency and more frequent financial statements.
The CFA Institute Centre for Financial Market Integrity and the Hong Kong Society of Financial Analysts - which together have 5,400 members in Hong Kong and on the mainland -  back the plan, saying the current system forces investors to 'guess or be exposed to rumours' about a company's financial status.
'We need to make sure Hong Kong becomes an international financial centre and we cannot neglect investors' demands,' another regulatory source said. However, the source admitted that pressure from listed companies meant a staged introduction had to be part of the plan.
The stock exchange first wanted to introduce quarterly reporting in 2002 but failed to proceed due to strong opposition from companies.
However, the British rule change last year left Hong Kong as one of the few developed markets without some form of quarterly reporting, and HKEx last September started consultation on the issue again.
In its consultation paper, HKEx proposed that large companies with a market capitalisation over HK$10 billion be the first to begin quarterly reporting, with smaller firms not required to do so until 2010.
A regulatory source said the exchange had dropped this proposal and would now require all firms, regardless of their size, to introduce quarterly results at the same time.
'Many commentators said this would add confusion to the market and give a different timetable to large and small firms,' the source said.
The source said although the US and the mainland were now reviewing whether they should continue quarterly reporting,  HKEx considered Hong Kong should still move ahead in the interests of investors.



HKEx to phase in quarterly reporting