Widespread Support for HAMS Proposal
3 September 2001
Webb-site.com is delighted to be publishing today the HAMS endorsement list. The list is an unprecedented multi-lateral show of support for a proposal in the Hong Kong financial markets. For many participants, this is the first time they have ever publicly endorsed a policy proposal of any kind - it is simply a very unusual request that goes to the highest levels of the organisation. As such, the level of response has been demonstrative of the depth of feeling on this issue. Many of the endorsers chose to include statements which we commend you to read.
The message to Government is clear. You asked for public comments on the proposal - and the market has spoken, loud and clear. Asset managers, trustees, media, infomediaries and even some listed companies have come forward and put their name on the list. For every name you see on this list, there are many more who have privately expressed private support but for legal or conflict reasons have been unable to publicly endorse. Investment banks in particular found themselves torn between the knowledge that good governance will expand their future market, versus the fear that they may face short-term reprisals for speaking up.
Do not take their silence as apathy - there is a very strong consensus that HAMS is needed to bring shareholder representation to the corporate governance playing field and thereby accelerate the reform process. This process will be slow and painful without shareholder representation.
The Policy Division of HAMS will work to improve the legal and regulatory framework, representing the needs and wishes of investors, the missing voice in the market for corporate governance.
The Appraisal Division of HAMS, with its corporate governance ratings of all listed companies, would provide the incentive of higher ratings and demand for shares of companies which reach for better standards, while identifying those who persist with bad governance practices and mobilising the voting power of minority shareholders through proxy recommendations.
Strengthening the legal rights of shareholders is worth nothing if the average shareholder cannot afford to enforce them. The Enforcement Division of HAMS, by quasi-class actions on behalf of investors, will ensure that legal rights are enforced often enough to create a meaningful deterrent to bad governance. Prevention is better than cure.
HAMS is a Hong Kong solution to a Hong Kong problem, and we are delighted to see local professional organisations such as the HK Society of Financial Analysts, the HK Venture Capital Association and the Technical Analysts Society of HK endorsing the proposal. At the same time, you cannot have a World-class financial centre without world-wide investors, and the list of asset managers shows widespread support both at home and overseas for the initiative.
With lower risk of losses from bad governance, investors will pay more for HK-listed equities, which will lower the cost of capital for HK issuers and support the economic growth of HK and China. The improvement in market quality will attract more issuers and investors, deepening the market and promoting Hong Kong's goal of being a world-class financial centre for China and Asia. That goal is key to our service-based economy. Now, it is up to the Government to proceed.
© Webb-site.com, 2001
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