1st April 2021


Hong Kong hit by dozens of trading stops after earnings deadline

Trading of more than 50 Hong Kong-listed companies was suspended on Thursday after several companies failed to report their earnings before the March 31 deadline.

GCL-Poly Energy Holdings and China Huarong Asset Management were among the companies that announced a business suspension. GCL-Poly said additional time is required to complete its audit procedures, while Huarong said it will delay the delivery of its earnings while it seeks to complete a transaction.

"It's a bit surprising to me that so many companies delay their earnings and most of their presentations are not explained very clearly," said Daniel So, strategist at CMB International Securities. "This year, surprisingly, there are so many delays, much more than last year when the pandemic hit. The longer they take to report earnings, the worse it will be for their share price."

Trading disruptions may dampen investor sentiment toward the Hong Kong stock market, where the benchmark briefly plunged into a technical correction late last month amid setbacks in the Hong Kong vaccine launch. town and when traders scrambled to sell expensive stocks in the wake of rising bond yields.

"Many investors may be concerned about their earnings and the quality of the reports," said So of CMB International. "If they report quickly and the audit report doesn't have a negative opinion on those companies, it should be fine."

Trade stops come as regulators in Hong Kong and mainland China seek to improve the standard of financial reporting for publicly traded companies. The Hong Kong Securities and Futures Commission said in February that it would enhance collaboration with the Financial Reporting Council, which oversees audit activities in Hong Kong, to ensure the quality of financial reporting.

Independently, the China Securities Regulatory Commission pledged to promote cross-border audit cooperation earlier this year in a statement on its 2021 work plan. The CSRC said it would establish inter-ministerial working groups to strengthen the crackdown. of illegal behavior, including IPO fraud and financial reporting, market manipulation.

Last year, nearly all Hong Kong-listed companies were able to provide an earnings update to investors before the March 31 deadline, overcoming difficulties posed by travel restrictions and economic lockdown following the coronavirus outbreak. The exchange allowed companies to publish unaudited results for that date in relaxed rules during Covid-19.

"It shows that the market has more companies with financial problems," said Francis Lun, CEO of Geo Securities Ltd. Retail investors should be particularly cautious in the current market environment, he added.

The Hang Seng Index rose 1 percent at 1:13 p.m. local time, following a widespread rally in Asian stocks fueled by optimism about the president's $ 2.25 trillion ($ 3 trillion) infrastructure plan. American Joe Biden.