JPMorgan clears its name in China Hongxing share sale
It reveals details to show it notified China Hongxing within 2 days of each sale
By Goh Eng Yeow 04 September 2009
The ball is now in China Hongxing Sports’ court to explain a five-month delay in the disclosure of the sale of a huge tranche of shares by a substantial shareholder, JF Asset Management.
This follows the release of details by JPMorgan Asset Management, which now owns JF, showing that it notified China Hongxing within two days of each sale.
Under Singapore Exchange (SGX) disclosure rules, China Hongxing should have gone public on the sales soon after it was notified by the fund manager.
JF had sold 126.5 million China Hongxing shares between Jan 8 and Feb 27 as it cut its stake in the firm by more than half to 4.08 per cent. But China Hongxing reported these notable transactions in a one-page statement only on Aug 6.
This delay also resulted in an error in the company’s latest annual report which showed that, as of March 19, JF held 235.05 million shares, or an 8.54 per cent stake, even though its stake had been sharply reduced by then.
The controversy dogging China Hongxing has ignited a debate over the ability of the SGX to enforce its own disclosure- based regime on listed firms which are incorporated outside Singapore.
China Hongxing is registered in Bermuda and does the bulk of its sportswear business outside Singapore. It is widely followed by retail investors, having topped the most actively traded counters’ list several times in the past fortnight.
Following a Straits Times commentary on the subject last Monday, the SGX said that it was looking into the matter and would take appropriate action, where necessary. China Hongxing had also said it would carry out an investigation.
JPMorgan then decided to produce details of the sales to make clear that the delay was not its fault. ‘Technically, the notices lodged by us with China Hongxing are not public documents... However, JPMorgan Asset Management’s then substantial shareholding is a matter of public record, having been disclosed in the company’s 2008 annual report,’ its chief operating officer (South Asia) Tony Morgan told The Straits Times.
Between Jan 8 and Feb 27, its records show it had transacted in China Hongxing shares on six occasions, as it trimmed its stake from 9.25 per cent to 4.08 per cent. After each transaction, it had notified the firm within two working days.
For the earlier transactions, JPMorgan staff had faxed the notices for changes in substantial shareholdings to China Hongxing’s offices in Quanzhou city in China. In more recent transactions, the notices were faxed to the company’s correspondent office in Singapore. ‘We hold fax confirmation transmission receipts for all the notices,’ Mr. Morgan added.
A check with China Hongxing yesterday for an update on the investigation it announced last week failed to yield fresh information. Its vice-president for corporate communications, Ms Jenny Yeo, replied in an e-mail: ‘We are still working on it and will make the announcement at the appropriate time.’
The latest controversy aside, China Hongxing was also among a handful of China plays where investors had been pressing for a dividend payout because it holds a huge cash hoard - about 2.67 billion yuan (S$565 million) as of end-June.
As recently as July, CIMB-GK said in a report that a dividend payment would remove doubts cast over the cash hoard. Last month, the company proposed an interim dividend of 0.01 yuan when it announced its half-year results. However, it has yet to advise on the date of payment.
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JPMorgan clears its name in China Hongxing share sale
It reveals details to show it notified China Hongxing within 2 days of each sale
By Goh Eng Yeow
04 September 2009
The ball is now in China Hongxing Sports’ court to explain a five-month delay in the disclosure of the sale of a huge tranche of shares by a substantial shareholder, JF Asset Management.
This follows the release of details by JPMorgan Asset Management, which now owns JF, showing that it notified China Hongxing within two days of each sale.
Under Singapore Exchange (SGX) disclosure rules, China Hongxing should have gone public on the sales soon after it was notified by the fund manager.
JF had sold 126.5 million China Hongxing shares between Jan 8 and Feb 27 as it cut its stake in the firm by more than half to 4.08 per cent. But China Hongxing reported these notable transactions in a one-page statement only on Aug 6.
This delay also resulted in an error in the company’s latest annual report which showed that, as of March 19, JF held 235.05 million shares, or an 8.54 per cent stake, even though its stake had been sharply reduced by then.
The controversy dogging China Hongxing has ignited a debate over the ability of the SGX to enforce its own disclosure- based regime on listed firms which are incorporated outside Singapore.
China Hongxing is registered in Bermuda and does the bulk of its sportswear business outside Singapore. It is widely followed by retail investors, having topped the most actively traded counters’ list several times in the past fortnight.
Following a Straits Times commentary on the subject last Monday, the SGX said that it was looking into the matter and would take appropriate action, where necessary. China Hongxing had also said it would carry out an investigation.
JPMorgan then decided to produce details of the sales to make clear that the delay was not its fault. ‘Technically, the notices lodged by us with China Hongxing are not public documents... However, JPMorgan Asset Management’s then substantial shareholding is a matter of public record, having been disclosed in the company’s 2008 annual report,’ its chief operating officer (South Asia) Tony Morgan told The Straits Times.
Between Jan 8 and Feb 27, its records show it had transacted in China Hongxing shares on six occasions, as it trimmed its stake from 9.25 per cent to 4.08 per cent. After each transaction, it had notified the firm within two working days.
For the earlier transactions, JPMorgan staff had faxed the notices for changes in substantial shareholdings to China Hongxing’s offices in Quanzhou city in China. In more recent transactions, the notices were faxed to the company’s correspondent office in Singapore. ‘We hold fax confirmation transmission receipts for all the notices,’ Mr. Morgan added.
A check with China Hongxing yesterday for an update on the investigation it announced last week failed to yield fresh information. Its vice-president for corporate communications, Ms Jenny Yeo, replied in an e-mail: ‘We are still working on it and will make the announcement at the appropriate time.’
The latest controversy aside, China Hongxing was also among a handful of China plays where investors had been pressing for a dividend payout because it holds a huge cash hoard - about 2.67 billion yuan (S$565 million) as of end-June.
As recently as July, CIMB-GK said in a report that a dividend payment would remove doubts cast over the cash hoard. Last month, the company proposed an interim dividend of 0.01 yuan when it announced its half-year results. However, it has yet to advise on the date of payment.
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