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Hong Kong firms to get new ratings

June 2001

Standard and Poor’s is to launch a new service that will assess the corporate governance standards of individual companies on Hong Kong’s Hang Seng Index.

The ratings agency’s service will allow investors to evaluate the transparency, accountability and disclosure practices of the 809 companies listed on the Hang Seng, many of which are family-controlled.

John Bailey, S&P’s director, said companies would be rated on a scale of one to ten, with ten being the highest possible score.

Businesses would not be required to publish the results, but ‘if companies start to go public with their scores, peer group pressure and investor demand could force others to do the same’, he said.

The credit ratings agency had discussed the service with companies and there had been a ‘fair amount of interest,’ Bailey added.

Gary Coull, executive chairman of the investment bank Credit Lyonnais Securities Asia, told delegates at a Hong Kong conference last month that investors in the region were now ‘focusing on those companies that meet international standards of transparency, independence and social awareness.’

The ratings service was first launched in Russia last year.




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