Troubled Chinese companies have found themselves among the lowest ranked in the Governance & Transparency Index (GTI) released yesterday.
But while doubts continue over the quality of governance among S-chips (Chinese companies listed in Singapore) following the emergence of some S-chip scandals, the GTI suggests that the sector is a mixed bag in terms of the quality of corporate governance.
The best-ranked S-chip is Pan Hong Property Group in 46th place with a score of 47 points. Epure International is in 53rd position with a score of 46 points, out of a total of 677 listed companies.
This is followed by Midas Holdings in 61st position with a score of 45 points against a full score of 100 points. Hi-P International is next in line with a score of 44 points in 70th position.
On the other hand, Guangzhao Industrial Forest Biotechnology Group, Oriental Century, Ocean International, FerroChina, and China Printing & Dyeing are among the 13 S-chips in the bottom 30 companies, after they saw points deducted over questionable issues.
Guangzhao IFB - which is ranked 671, the last among S-chips - had 32 points deducted from 39 points. The group had defaulted on its convertible bonds, after a change in controlling shareholding triggered early redemptions of its convertible bonds.
Ocean International is also haunted by the same problem with convertible bonds, while FerroChina has become insolvent and China Printing has gone into judicial management with two missing ex-honchos after its parent firm went broke. Oriental Century is a case of the chief executive confessing to cooking the books for years.
Some market watchers took issue with the near absence of S-chips among the top 50, except for Pan Hong Property.
Roger Tan, vice-president of SIAS Research, felt that the fact that there are a handful of Chinese companies in the bottom 50 of the list should give reason for investors to be vigilant when investing in Chinese companies.
Bigger S-chips like Cos- co Corp and China Aviation Oil scored better than the smaller S-chips on the GTI, with Cosco in 266th position and China Aviation Oil in 330th, but both have 12-15 penalty points deducted. China Hongxing Sports, a major sports brand in China, is ranked 166th with a 39-point net score after 8 points were deducted.
‘Clearly, some companies need to be more transparent,’ said an S-chip analyst. ‘More needs to be done in terms of disclosure but, obviously, the problem is there doesn’t seem to be anyone who can force company management to be more open if the company refuses to talk.’
SIAS Research’s Mr. Tan said that, to be fair, many S-chips fall into the middle ranks of the GTI. ‘This, to me, suggests that the average level of corporate governance of Chinese companies compared to non-Chinese ones is about the same,’ he said.
‘Interestingly, there are quite a few China companies with positive adjustments,’ he added. ‘This suggests that they are trying to improve their governance and transparency.’
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Low rankings for troubled S-chips
By LYNETTE KHOO
3 April 2009
Troubled Chinese companies have found themselves among the lowest ranked in the Governance & Transparency Index (GTI) released yesterday.
But while doubts continue over the quality of governance among S-chips (Chinese companies listed in Singapore) following the emergence of some S-chip scandals, the GTI suggests that the sector is a mixed bag in terms of the quality of corporate governance.
The best-ranked S-chip is Pan Hong Property Group in 46th place with a score of 47 points. Epure International is in 53rd position with a score of 46 points, out of a total of 677 listed companies.
This is followed by Midas Holdings in 61st position with a score of 45 points against a full score of 100 points. Hi-P International is next in line with a score of 44 points in 70th position.
On the other hand, Guangzhao Industrial Forest Biotechnology Group, Oriental Century, Ocean International, FerroChina, and China Printing & Dyeing are among the 13 S-chips in the bottom 30 companies, after they saw points deducted over questionable issues.
Guangzhao IFB - which is ranked 671, the last among S-chips - had 32 points deducted from 39 points. The group had defaulted on its convertible bonds, after a change in controlling shareholding triggered early redemptions of its convertible bonds.
Ocean International is also haunted by the same problem with convertible bonds, while FerroChina has become insolvent and China Printing has gone into judicial management with two missing ex-honchos after its parent firm went broke. Oriental Century is a case of the chief executive confessing to cooking the books for years.
Some market watchers took issue with the near absence of S-chips among the top 50, except for Pan Hong Property.
Roger Tan, vice-president of SIAS Research, felt that the fact that there are a handful of Chinese companies in the bottom 50 of the list should give reason for investors to be vigilant when investing in Chinese companies.
Bigger S-chips like Cos- co Corp and China Aviation Oil scored better than the smaller S-chips on the GTI, with Cosco in 266th position and China Aviation Oil in 330th, but both have 12-15 penalty points deducted. China Hongxing Sports, a major sports brand in China, is ranked 166th with a 39-point net score after 8 points were deducted.
‘Clearly, some companies need to be more transparent,’ said an S-chip analyst. ‘More needs to be done in terms of disclosure but, obviously, the problem is there doesn’t seem to be anyone who can force company management to be more open if the company refuses to talk.’
SIAS Research’s Mr. Tan said that, to be fair, many S-chips fall into the middle ranks of the GTI. ‘This, to me, suggests that the average level of corporate governance of Chinese companies compared to non-Chinese ones is about the same,’ he said.
‘Interestingly, there are quite a few China companies with positive adjustments,’ he added. ‘This suggests that they are trying to improve their governance and transparency.’
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