Scandals give HK investors the jitters
Hong Kong investors are looking at local brokerage companies with suspicion since two securities firms were closed within the last four months for allegedly dishonest dealings.
The Securities and Futures Commission (SFC), the city's securities authority, early this week banned local brokerage house Great Honest Investment from trading, while a court has grounded its major shareholder from leaving Hong Kong.
The SFC also barred Great Honest from using the trading system, and its clearing unit has declared the brokerage to be in default.
This is the second brokerage scandal since August, when Man Lung Hong was disqualified from securities trading after police arrested a staff member who allegedly stole clients' assets worth more than HK$20 million.
Hong Kong has about 400 local brokerages, collectively classified as a minor group in the Hong Kong stock exchange. They have 11 percent of market share and are facing increasing competition from banks, which have in recent years been attracting customers with more flexible commission rates.
Some brokerages collapsed because of the severe competition. Others were forced by authorities to suspend securities trading because of allegations of abuse of clients' assets.
However, securities market monitors believe investors should not panic. "The problem of an individual brokerage house does not mean the industry has a problem," a spokesman from the Hong Kong Securities Professionals Association said.
(China Daily 11/15/2007 page15)
