The chair of Hong Kong’s market regulator the Securities and Futures Commission (SFC) has called for listed companies in the region to step up corporate governance to strengthen investor confidence in the equity market.
Speaking at a Chamber of Hong Kong Listed Companies event last week, Carlson Tong, chair of the SFC, said Hong Kong must enforce strict corporate governance standards to maintain a high-quality market and compete for investment internationally.
He said since the global financial crisis, there had been calls for ethical business practices, which listed companies should strive for, alongside regulatory powers to enforce them.
“There are still market concerns over listed companies’ serious corporate misconduct and how it can be detected,” he said.
“The number of listing-related complaints we receive has continued to account for 25-30% of total complaints filed with the SFC in the past five years.”
He said companies based in mainland China account for 57% of Hong Kong Exchange’s market capitalisation, and many of these are medium-sized firms with nascent corporate governance structures that regulators and participants should help development to strengthen the region’s equity market.
Citing a McKinsey survey, he added, “the quality of corporate governance was one of the main factors influencing institutional investors’ investment decisions in a company.”
He added that the island’s development as an international financial centre would be put at risk if a high level of best practice corporate governance was not met by firms listed in Hong Kong.
“This is not a time for complacency, and we have to continue to push ahead so as to enhance investor confidence in our markets,” he said.